Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

ALEXANDRA PARK AND PALACE BILL [Lords] (By Order)

GREATER MANCHESTER BILL [Lords] (By Order)

Order for Second Reading read.

To be read a Second time upon Thursday 24 July.

DUNDEE PORT AUTHORITY ORDER CONFIRMATION

Mr. Secretary Younger: presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Dundee Port Authority: And the same was read the First time; and ordered to be considered upon Wednesday 23 July and to be printed. [Bill 254.]

Oral Answers to Questions — ORAL ANSWERS TO QUESTIONS

Mr. Speaker: I remind the House again that I have requested Ministers to answer only one supplementary question, so that we can make greater progress.

AGRICULTURE, FISHERIES AND FOOD

Prices

Mr. Cryer: asked the Minister of Agriculture, Fisheries and Food, by how much agricultural prices have risen since May 1979.

The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker): The latest available information shows that the index of producer prices in May was 4·1 per cent. above the level a year earlier.

Mr. Cryer: Is it not true that the Minister, after repeatedly denying that he would do so, has devalued the green pound on three occasions? As a result of the summit agreement he has now abandoned the right to control prices for at least the next two years, and, therefore, by increasing prices through the common agricultural policy he has abandoned the British housewife. Does not he accept that in a balance between the interests of the consumer and the farmer he is likely to come down on the side of the farmer, because he is one?

Mr. Walker: Obviously the hon. Gentleman did not hear my reply. I said that in one year, prices to the producer had risen by 4·1 per cent. If the hon. Gentleman is suggesting that that is too much in the past year, he had better tell the National Union of Agricultural and Allied Workers that its claim for a 20 per cent. increase was unjustified.

Mr. Colin Shepherd: Does not my right hon. Friend agree that the figures that he has given indicate that a pat on the back is deserved by processors, producers and retailers? At the same time, should not recognition be given to the fact that margins are being badly squeezed, and that that might not be healthy in the long run?

Mr. Walker: The reply shows clearly that the food industry, particularly the producers, has been incredibly successful in a year of big inflationary costs and large, increased, input costs in keeping down inflation. It is a pity that Labour Members cannot pay tribute to them.

Mr. Mason: Is the right hon. Gentleman aware that since last June the price of a pint of milk has risen from 13½p to 16½p? If he gives way to the present pressures for an increase of another 1½p, is he aware that milk will have risen in price by 33 per cent. in about 13 or 14 months? Is the right hon. Gentleman further aware that the high price of milk is causing consumption to fall? What is his attitude towards the demand for an increase of another 1½p?

Mr. Walker: I shall consider the application that has been made, but it was made by the Dairy Trade Federation, among others, with the support of the cooperative movement.

Fishing Industry

Mr. G. Strang: asked the Minister of Agriculture, Fisheries and Food what discussions he has had with representatives of the fishing industry about the state of the industry; and if he will make a statement.

Mr. Skinner: asked the Minister of Agriculture, Fisheries and Food what further steps he is taking to restore the fortunes of the fishing industry.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): My right hon. Friend and I, together with the Minister of State, Scottish Office, met representatives of the major fish catching organisations on 3 July to discuss papers which they had prepared regarding the financial position of the industry. We are considering the issues raised at that meeting.

Mr. Strang: Does not the Minister of State accept that, important as the negotions in Luxembourg next week will be, more crucial to the fishing industry at this time are the discussions that will take place in the British Cabinet on the industry's formal request for £35 million of temporary aid? Welcome as the £3

million was, will the Minister confirm that the industry is in desperate need of aid, and that the Government are seriously considering the figure of £35 million?

Mr. Buchanan-Smith: Both questions are crucial, but the common fisheries policy and the long-term future of the industry are probably the most crucial factors of all. The meeting that we had with the industry was at the invitation of Ministers, which demonstrates the concern of the Government about the current financial situation.

Mr. Skinner: Is it not true to say that since the Tory Government came into office, allied with their sidekicks in the Common Market, the British trawling industry has had havoc wreaked upon it, with the result that a fortnight ago a statement was made that there was a "For sale" notice on nearly every trawler in the British fleet, including the one that the Prime Minister launched a couple of years ago, the "Boston Sea Stallion", which is now losing £2,000 a trip? So much for Tory expertise and efficiency. [Interruption.] Not only stallions but—

Mr. Speaker: Order. The hon. Gentleman must ask a question.

Mr. Buchanan-Smith: If the hon. Gentleman understood the fishing industry, he would understand, first, that the problems of the deep-sea industry are related basically to the question of the extension to 200 miles and not to the Common Market. Secondly, the hon. Gentleman should also realise that the biggest handicap that could face the fishing industry would be stalemate concerning its future. We are determined to break that stalemate and ensure that there is a future for the industry.

Mr. Pollock: Is my hon. Friend aware that there is increasing concern among the fishermen on the north-east coast of Scotland about how they are to keep afloat pending settlement of the common fisheries policy? Will he accept that there are increasingly strong feelings that one solution would be the early injection of a fuel subsidy?

Mr. Buchanan-Smith: We had a meeting yesterday with representatives of the fishing industry. They demonstrated their


concern that, while there were important financial difficulties being faced at the present time which require solution, equally it is the long-term solution—the framework to ensure a future for the industry—that matters most of all. It is to that end that we are negotiating a proper settlement under the common fisheries policy.

Mr. J. Enoch Powell: Who is it that would deny us the benefit of a 200-mile limit?

Mr. Buchanan-Smith: As the right hon. Gentleman knows, fish do not know 200-mile limits. The most effective conservation we can have is that which is internationally agreed. Under whatever system we have, conservation has to be agreed internationally. In that respect, being a member of the EEC makes no difference whatever.

Mr. Donald Stewart: Is the hon. Gentleman aware that members of crews are leaving vessels in all the ports around the coast, and that an immediate injection to carry the industry over until the common fisheries policy is settled—if it ever will be—is absolutely essential?

Mr. Buchanan-Smith: I acknowledge the problems that the industry is facing. It is precisely that point that we have under discussion at present, in consultation with the industry.

Mr. Peter Fraser: Since the meeting of 3 July to which my hon. Friend referred, has he received any revised figures from the representatives of the Scottish fishing industry indicating that there has been a yet further deterioration in the marketing of their fish up and down the east coast of Scotland?

Mr. Buchanan-Smith: At our meeting of 3 July we asked the industry for amplification of some of the figures it produced then. Those figures were received only last night and we are considering them urgently.

Mr. Robert Hughes: Is the right hon. Gentleman aware that the fishing industry has said that it cannot wait until September or November for the injection of aid, which now seems to be demanded even by his own Back Benchers? Will the hon. Gentleman tell us what prospects there are of meeting the subsidy that the industry requires?

Mr. Buchanan-Smith: For the reasons that the hon. Gentleman has mentioned, we are considering it now.

Mr. Myles: Is there no way, under article 39 of the Treaty of Rome—which says that incomes in the industry ought to be kept up to a reasonable level—of restricting imports which are damaging those incomes so much?

Mr. Buchanan-Smith: That is precisely why we have taken action on two fronts, first, in relation to imports from third countries and, secondly, in relation to an interim aid scheme.

Mr. Mason: Is the hon. Gentleman aware that there has been a rapid deterioration in the industry in the past few months? He keeps stressing the need for aid in the long term, that is to say, through the common fisheries policy. What will he do about the serious position in the industry now? Is he prepared to give some short-term aid—yes or no?

Mr. Buchanan-Smith: That is precisely the point that we are considering at present.

Mr. Mason: The hon. Gentleman said that this issue was under urgent consideration when he was asked the quetion on the last occasion. What will he tell the House now?

Mr. Buchanan-Smith: The right hon. Gentleman must have failed to hear me. I pointed out that the latest representations from the industry were received only last night.

Agricultural Tenancies

Mr. Heddle: asked the Minister of Agriculture, Fisheries and Food what criteria he adopts when considering applications for short fixed-term licences granted under section 2 of the Agriculture Holdings Act 1948.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Jerry Wiggin): In general terms, ministerial approval to a section 2 short-term letting or licence is given whenever it would be unreasonable to require a full agricultural tenancy to be entered into.

Mr. Heddle: Will my hon. Friend state how many licences have been granted by the Government on land not


owned by local councils, and for what reasons? Most particularly, will he agree that a more liberal use of the provisions of section 2 of the 1948 Act would release more land to enable young farmers to get on the ladder and eventually assume an agricultural tenancy?

Mr. Wiggin: I have not the figures for the last year, but in the last five years 6,797 such lettings have been given. My hon. Friend will realise that those tenants do not have security of tenure. This is a licence and a special issue that should not be treated as a way of getting round the main legislation.

Co-responsibility Levy

Mr. Nicholas Winterton: asked the Minister of Agriculture, Fisheries and Food what representations he has received about the increase in the co-responsibility levy to be paid by dairy farmers as part of the recently announced European Economic Community budget package.

Mr. Peter Walker: I have received a number of representations from farmers and their representative organisations.

Mr. Winterton: My right hon. Friend recently acknowledged the cash flow problems of farmers, particularly dairy farmers. Will he therefore explain to the House how he came to accept the package within the EEC which increases the co-responsibility levy? Is he aware that as a result, the dairy farmer with 100 milking cows will be paying an extra £1,000 a year?

Mr. Walker: My hon. Friend has left out one side of the equation. Although the farmer will be paying an extra £1,000 a year in co-responsibility levy, he will be receiving almost an extra £1,000 a year in an extra price increase as a result of that agreement, so the effect is virtually neutral. With regard to the co-responsibility levy, I agree with my hon. Friend that we would have preferred no increase in price.

Mr. David Steel: Has the Minister any plans to restrict the retail sales of untreated milk in small quantities after 1983? Does he feel under any pressure from the EEC to do so?

Mr. Walker: No, we do not feel under any pressure from the EEC to do so. I

can speak only for England and Wales, but we have made detailed announcements about green top milk. The position is different in Scotland.

Mr. Peter Mills: Although the co-responsibility levy does not help the dairy farmers of this country, will the Minister agree that the totally irresponsible editorial in the Daily Mail—which stated that the Milk Marketing Board should be disbanded and that it was a quango—would do even more harm? Will he kindly ask his press officer to go round to the Daily Mail offices and explain the benefits of the Milk Marketing Board to the consumer and to the producer?

Mr. Walker: I cannot guarantee that my press officer will perform that particular task, but I can say that both sides in this House are agreed that the Milk Marketing Board has been both a stabilising and a progressive influence in terms of the dairy industry of this country.

Mr. Torney: In view of the fact that levies are supposed to reduce dairy herds, will the Minister please tell the House why the United Kingdom must reduce its dairy production when we do not produce enough milk for our own use, and have no surplus?

Mr. Walker: I am sure that the hon. Gentleman will be delighted to know that last month milk production was 6 per cent. higher than last year.

Tomatoes (Imports)

Mr. Nicholas Baker: asked the Minister of Agriculture, Fisheries and Food if the current level of imports of tomatoes from Holland into the United Kingdom represents an increase over the level of imports at the same time in 1979.

Mr. Wiggin: Yes, Sir.

Mr. Baker: Will my hon. Friend take note that Dutch tomato exports to this country over the last year are 51 per cent. above the figure for the previous year, bearing in mind that Dutch overall production is slightly down? This is the result of the subsidised price or the cheap price of energy that is available to Dutch growers. As our industry is in crisis, what action will my hon. Friend take at United Kingdom and at EEC level?

Mr. Wiggin: My hon. Friend will appreciate that this matter has to be dealt with by the Commission. It reported on 11 July on this and at the Council of Ministers meeting next Tuesday my right hon. Friend will be debating this matter in the hope that we can find some solution to this extremely difficult problem.

Mr. Stephen Ross: Is the Minister aware that more tomatoes are coming in not only from Holland but from Albania? Surely we can do something to stop those imports. May we take it as a certainty that next Tuesday the Government will make a stand and will do something for growers in this country who are going bankrupt? If Germany and France can do something, why cannot we?

Mr. Wiggin: I assure the hon. Gentleman that we are fully seized of the importance of this matter. My right hon. Friend certainly intends to make this country's views deeply felt. I have looked into the matter of Albanian imports. There is no substantive evidence that they are doing any harm to this market this year.

Mr. John Wells: Will my hon. Friend try to persuade our mutual right hon. Friend, the Minister of Agriculture, Fisheries and Food, to have a little talk to our further right hon. Friend, the Secretary of State for Energy, because the trouble lies in the lack of liaison between our two right hon. Friends and the Commission? As the hon. Member for the Isle of Wight (Mr. Ross) rightly said, if the Germans and the French can do something about it, why cannot we?

Mr. Wiggin: I assure my hon. Friend that there is no lack of liaison. This matter has been and will continue to be dealt with at the highest possible level.

Mr. Strang: Is the Minister aware of the potentially serious crisis in the glasshouse industry? Do the Government take the view that Holland should be required by the European Community to raise its energy prices into line with those pervailing throughout the Community?

Mr. Wiggin: I am fully seized of the difficulties of the industry. We have always acknowledged the problems. We shall be doing what the hon. Gentleman suggested.

Atlantic Salmon

Mr. John MacKay: asked the Minister of Agriculture, Fisheries and Food, if he will withhold agreement from any proposal by the European Economic Community to include the Atlantic salmon in any common fisheries policy.

Mr. Buchanan-Smith: Fishing for Atlantic salmon in maritime waters is already covered by the EEC's existing fisheries policy.

Mr. MacKay: Does my hon. Friend realise that there is considerable concern lest countries with no salmon rivers should increase the fishing going on in the high seas to the detriment of the stock? Will he assure the House that the Government will give their utmost support to the North Atlantic salmon convention, which I believe is currently discussing matters relating to salmon in the high seas?

Mr. Buchanan-Smith: The Community proposes a ban on all high seas fishing for salmon beyond 12 miles. We wholly support the North Atlantic salmon convention.

Mr. Bill Walker: Will my hon. Friend take note of the concern of the Tay salmon fishers who are worried that the netting of salmon outside the river is having an adverse effect on the stocks?

Mr. Buchanan-Smith: I shall be happy to pass that point on to my right hon. Friend the Secretary of State for Scotland.

Hill Livestock Producers

Mr. John Home Robertson: asked the Minister of Agriculture, Fisheries and Food if he will make a further statement on support arrangements for hill livestock producers.

Mr. Peter Walker: The rates of hill livestock compensatory allowances will be reviewed in the autumn in consultation with the farmers' unions.
In addition to these allowances, hill cattle producers will be eligible for head-age payments under the new European Community suckler cow premium scheme and hill sheep producers should benefit significantly from the arrangements agreed for the new common organisation of the sheep market.

Mr. Home Robertson: Is the Minister aware that it is essential that he should make a firm statement on support for hill sheep within the next week if hill farmers are not to face ruin because they do not get adequate returns from the store markets within the next month? If the EEC scheme is not to come into effect in time, will he at least give an undertaking that funds will be made available from national sources?

Mr. Walker: The announcement of the increase in the subsidies for sheep in this market was made by me some weeks ago when I increased all the guaranteed allowances by 11 per cent. Therefore, with 1 million extra lambs and an 11 per cent. increase in the last year on the guaranteed price, there should not be any case of starvation in the hills.

Mr. David Steel: The Minister must be aware that 15 July was mentioned originally as the starting date for the sheepmeat regime. There is great uncertainty in hill sheep areas with the store sales coming up next month. When will the new starting date be announced?

Mr. Walker: I agree with the right hon. Gentleman that there is anxiety to obtain an additional 18 per cent. on what I have already announced, and I can understand that. The date of 15 July was convenient for us, but it has to wait for the completion of the negotiations with New Zealand, which are taking place now, and for the Commission to say when it can implement the scheme. As far as I am concerned, the sooner the better. I hope for an announcement at next week's meeting.

Mr. Myles: If we cannot get this agreement with the EEC before the store sheep sales, will my right hon. Friend consider raising the national guarantee to that level so that the store producers as well as the fatteners will benefit?

Mr. Walker: The degree to which we can do that will have to be considered and also the date, which is important. We have already increased the guarantee system by 11 per cent. after one of the best lambing seasons in recent times.

Mr. Wm. Ross: Is the right hon. Gentleman aware that the survey of hill marginal land in Northern Ireland is complete but that it will not be completed in the rest of the United Kingdom until

1981? Therefore, will he make an immediate application for an extension for Northern Ireland so that it may reap the maximum benefit from the sums which are now available?

Mr. Walker: Discussions are going on in Brussels about how we can speed up the classification of hill marginal land throughout the United Kingdom. There are obvious advantages in doing this throughout the United Kingdom at the same time.

Common Agricultural Policy

Mr. Dormand: asked the Minister of Agriculture, Fisheries and Food if he is satisfied with progress which has been made towards reform of the common agricultural policy.

Mr. Peter Walker: In both price fixings since we took office agricultural support has been reduced in real terms, and this represents progress towards reform. Added to that, the new sheepmeat regime is the first occasion on which the Community has decided to go in for a deficiency payments system. I believe that, too, is a welcome reform.

Mr. Dormand: Is the right hon. Gentleman aware of the increasing anger in Australia and New Zealand about the effect of the EEC's farm policy on the economies of those countries from which we have had great support in the past? Is he further aware of the threats of retaliation from those two countries, not least on the export of uranium? Is not this yet another example of this crazy system? If he cannot change it fundamentally, is it not time that we withdrew from it completely?

Mr. Walker: The New Zealand and Australian positions are rather different. Australia has always negotiated toughly on all trade bases. It is not unknown for Australia to have protectionist policies for its own benefit. Therefore, it is understandable that it should have spoken out as it has in this sphere.
It is important that Western Europe should not take actions which destroy the economy of New Zealand. That is why we agreed only to a sheepmeat regime which was subject to New Zealand having a satisfactory agreement. I hope and believe that there is every possibility of New Zealand obtaining a satisfactory agreement.

Mr. Dykes: As there is a coefficient of 50:1 between retail prices in this country and their rate of rise and intervention price fixing in the CAP, is it not unfair to blame all our troubles on CAP price increases?

Mr. Walker: Over the past year inflation on non-food items has been 24 per cent., but on food items as a whole it has been only 14 per cent. and a minor part of that is the increase in CAP prices. Over the past two years CAP prices have been a stabilising influence.

Mr. Spearing: Did the Minister note the remarks of his right hon Friend the Lord Privy Seal yesterday to the effect that the Government would be putting forward their own proposals for the financial restructuring of the Common Market's funds? What contributions will the Ministry of Agriculture make, what proposals will be made and will the right hon. Gentleman publish them?

Mr. Walker: They will be the usual lively, progressive sensible proposals that we make on all such occasions, and we shall be only too proud to publish them.

Mrs. Kellett-Bowman: Does my right hon. Friend agree that, now that Germany is the largest paymaster in Europe, it will be his strongest ally in seeking further reform of the common argicultural policy?

Mr. Walker: Yes. The reform of the budget means that we do not have eight beneficiaries and one paymaster, and that brings about a considerable change in attitudes.

Mr. Heffer: Is it not time that the right hon. Gentleman and his right hon. and hon. Friends told the people the truth about the financing of the Common Market—that 1981 is bound to be a crunch year, that the Common Market will be in a great financial crisis, and that, unless something is done about the CAP and the whole question of financing the Common Market, we shall be in trouble, and so will the Market?

Mr. Walker: I believe that the success that we have had in price restraint in the last two price fixings, coupled with going over to deficiency payment schemes, is a considerable contribution. Most important, as my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) has just

mentioned, now that the cost of the CAP is more equally borne by other countries that will enable us to make more rapid progress.

Mr. Budgen: Will my right hon. Friend explain how it will be possible to reform the CAP in such a way as to reduce the Community budget, except by allowing farm prices to fall in real terms?

Mr. Walker: One of the important factors is the degree to which, for example, the problem of financing the Community's surpluses is borne, not on the CAP but by the national Governments responsible for producing those surpluses. A move towards that principle would be very helpful.

Mr. Mason: Is not the right hon. Gentleman aware that the sheepmeat regime is creating uproar in the Commonwealth? He has already been made aware during Question Time that Australia is angered and talking of trade war, and that New Zealand is in the throes of concern, fearing a cutback in not only its lamb exports but butter exports. What exactly is the proposal that Gundelach has taken to New Zealand, with the right hon. Gentleman's agreement, that is causing so much anger in Australia and New Zealand?

Mr. Walker: The telegrams from New Zealand that I have seen, and the reports this morning, in no way vindicate what the right hon. Gentleman has just said. In fact, the Prime Minister of New Zealand welcomed Mr. Gundelach's visit and suggested that he had come with constructive proposals. The right hon. Gentleman is surely reporting only the remarks made by one Australian Minister, and not the New Zealand position. I hope that out of the negotiations a satisfactory arrangement for New Zealand will be made. If it is not, there is no sheep-meat regime. That is the strength of our position.

Mr. Mason: Does the right hon. Gentleman think, because of his alleged telegrams saying that the Prime Minister of New Zealand welcomed Mr. Gundelach, that next Tuesday at the Agriculture Council meeting he will secure agreement on a sheepmeat regime?

Mr. Walker: I do not know in detail what talks are going on today. I would


very much hope so, because I believe that what is on offer to New Zealand safeguards its exports of lamb to Europe and gives it a dairy products quota which, as a result of the previous Government's renegotiation, it would not otherwise have had.

Agricultural Produce (Imports—Exports)

Mr. Hardy: asked the Minister of Agriculture, Fisheries and Food to what factors he attributes the disparity in value between British agricultural produce sales to France and French sales to Great Britain; to what extent different marketing and sales promotion techniques are responsible; and if he will make a statement.

Mr. Peter Walker: France's agricultural industry is much larger than ours. France is a traditional food exporter, and has climatic advantages for certain crops. Good marketing has no doubt contributed in some areas, and the illegal restrictions on United Kingdom sheep-meat exports prevented exploitation of our comparative advantage in that sector.

Mr. Hardy: Does not the right hon. Gentleman consider that official French Government support for, and involvement in, marketing in this country is extremely damaging to British national and agricultural interests? Does he agree that this extends much further than the fruit sector, and is becoming increasingly relevant to the egg trade?

Mr. Walker: There is also a range of marketing benefits, helps and subsidies available to British exporters, and they are substantially used by them. For example, my recent decision substantially to increase the grants for marketing cooperatives in this country will be a positive help to them.

Mr. Moate: On the question of French sales to Britain, has my right hon. Friend seen the report that the Office of Fair Trading may rule against the agreement between the growers and the trade to restrict imports of French Golden Delicious to top grades of fruit only? Does not he agree that it would be disgraceful if the Office of Fair Trading were to intervene in that way, and that what we need are more such agreements to protect British interests?

Mr. Walker: I do not know the detail of any such agreements. Judging by the pronouncements of the various organisations named, there is some doubt as to whether any specific agreement exists. It would be up to the Office of Fair Trading to decide upon the strength and nature of the agreement as to whether it was against the rules of fair competition.

Mr. Skinner: To what extent do the French sales, both in relation to this question and intrusion into other markets, contribute to the statements that the right hon. Gentleman made at Warwick a week last Saturday, when he argued that throwing people out of work and creating a £7,000 million bill for the public sector borrowing requirement was too high a price for squeezing inflation out of the economy?

Mr. Walker: It was because of my anxiety about unemployment that I considered it so disastrous for the previous Government to pursue the green pound policy that they did, and lose many jobs in this country.

European Community (Food Stockpiles)

Mr. Thomas Cox: asked the Minister of Agriculture, Fisheries and Food what discussions he is having with the European Economic Community in an effort to reduce the present food stockpiles.

Mr. Buchanan-Smith: Structural surpluses can be reduced only by bringing production into better balance with demand. The reductions in farm support prices in real terms will help to achieve this.

Mr. Cox: Whilst I note that reply, is not the Minister aware of the anger of British people when they hear about the surpluses and the way in which they are disposed of? Is it not time we told the Community that we have had enough of this nonsense, which is what it is? Will the hon. Gentleman also bear in mind that some of the commodities that are in surplus—cereals and skimmed milk—could be better used to feed the hungry people of the world than lying in storage, as they do for many years? Will he use his best endeavours to bring that about?

Mr. Buchanan-Smith: First, it is important to get the surpluses into perspective. The hon. Gentleman mentioned cereals. The cereals currently in store in intervention in the Community amount to only 10 days' supply. Secondly, we share the hon. Gentleman's concern about the way in which the surpluses are disposed of. That is precisely why we have taken such a firm line in Europe in relation to exports to Eastern Europe.

Mr. Stanbrook: What are the Government doing to transfer some of the surplus food to the starving people of East Africa, who might die without it?

Mr. Buchanan-Smith: Under the world food programme and other aid programmes, £30 million to £40 million a year is already being spent by the Community to do that. My hon. Friend must remember that we must do it in a way that does not disrupt normal trade or hinder development of agriculture in the countries concerned.

Mr. Arthur Lewis: Is the Minister aware that it was said on the radio today that the people now in Moscow, attending the Games, are living like proverbial lords off the fat of the land, supplied at the British taxpayer's expense through the Common Market subsidies? Is that part of the Government's policy?

Mr. Buchanan-Smith: Our position on exports to Eastern Europe has been made absolutely plain. There is a later question on the Order Paper about the subject.

Mr. Nicholas Winterton: As the United Kingdom makes no overall net contribution to the surplus of dairy products and milk within the EEC, how does my hon. Friend think the co-responsibility levy will affect British dairy farmers? Does he think that it could well result in our having to import more dairy products?

Mr. Buchanan-Smith: My right hon. Friend has already answered my hon. Friend's question on the co-responsibility levy. I hope that my hon. Friend notices that in the course of the past 12 months the Government have removed the unfairness of the subsidies through MCAs on exports from Europe of milk products to Britain. Therefore, for the first time for

many years, the British dairy farmer can compete on equal terms with his counterpart in Europe.

European Community (Sales to USSR)

Dr. Mawhinney: asked the Minister of Agriculture, Fisheries and Food if he will place on the agenda of the next European Economic Community Agriculture Ministers' meeting the sale of subsidised European Economic Community surplus foodstuffs to the Union of Soviet Socialist Republics.

Mr. Peter Walker: As a result of continued United Kingdom pressure, the Community's restrictions on subsidised exports to Russia have been tightened. We continue to be totally opposed to such sales, and we shall continue to make our views clear.

Dr. Mawhinney: As the Government, the Conservative Benches and the country are all against the supply of excess EEC foodstuffs at reduced prices to Russia, will my right hon. Friend make clear to the other EEC Agriculture Ministers that the Government will no longer co-operate with them until the supply of cheap foodstuffs is stopped?

Mr. Walker: No, Sir. I am sure that the correct method is the one that we have used—already with substantial success—of reductions in the volume of trade. That is the method which is legal.

Mr. McNamara: If the right hon. Gentleman is against subsidised exports, how will he stop them—not reduce them?

Mr. Walker: That is our objective.

Mr. Cormack: Does my right hon. Friend accept that it is unacceptable that the Russians should be sold cheap butter so that they can make more guns? Will he adopt the most belligerent stance possible and tell all his colleagues in the Council of Ministers that there will be no co-operation from Britain unless the Community stops sending subsidised foodstuffs to Russia?

Mr. Walker: Yes, Sir. We have made substantial progress in that sphere. We now have some allies in the Council of Ministers, and we shall continue our campaign.

European Community (Meeting of Agricultural Ministers)

Mr. Spearing: asked the Minister of Agriculture, Fisheries and Food what items will be on the agenda for the meeting of European Economic Community Agricultural Ministers on 22 July.

Mr. Peter Walker: I refer the hon. Member to the written answer given by my right hon. Friend the Lord Privy Seal on 1 July in response to a question by my hon. Friend the Member for Preston, North (Mr. Atkins) on forthcoming business in the European Council of Ministers.

Mr. Spearing: When the Minister next discusses New Zealand butter quotas with his colleagues, will he point out that New Zealand's failure to achieve some of those quotas is due to the unrealistically high levies imposed by the EEC? Will he confirm that New Zealand can sell butter at 27p a packet in Britain and that the EEC equivalent would cost 40p?

Mr. Walker: The volume of sales has not been affected by the level of the levy so much as by the manner in which it has been operated, namely against the volume of butter that comes in from New Zealand. The New Zealand Government would like to obtain better butter prices than they have done in the past.

Mr. Leighton: Does the Minister recall that he has given repeated assurances from that Dispatch Box, including the assurance that he gave in answer to his hon. Friend the Member for Holland with Boston (Mr. Body), to the effect that he would not increase the prices of goods in structural surplus? As he has now reneged on those assurances twice in succession, does he believe that his word has any credibility in this House?

Mr. Walker: I believe that the hon. Gentleman was absent when I answered an earlier question. I pointed out that food producers' prices had risen by only 4·1 per cent. in the past 12 months. The two smallest CAP price increases in the history of the Community have taken place under this Government.

Mr. Body: Will my right hon. Friend draw the attention of his European colleagues to the fact that the tax on im

ported wheat is higher that it was under the Corn Laws?

Mr. Walker: The Government have constantly negotiated for reductions in the levies on imported goods that the Community cannot supply.

United Kingdom Agriculture (Efficiency)

Mr. Dykes: asked the Minister of Agriculture, Fisheries and Food whether the basic efficiency of United Kingdom agriculture has fallen below that of other European countries.

Mr. Peter Walker: No, Sir.

Mr. Dykes: As we have more machinery, money and productivity per unit of output, why cannot British agriculture produce 100 per cent. of our requirements over the next few years?

Mr. Walker: There is substantial scope for expansion in several spheres. During the past decade we have become more self-sufficient. A recent report shows that, on any analysis, Britain still possesses the best performance and efficiency record in many areas.

Mr. Budgen: Will my right hon. Friend explain how the basic efficiency of British agriculture can be judged?

Mr. Walker: I sympathise with my hon. Friend. He implies that it is difficult to find any criteria for comparing one country with another. However, if one considers the yields of certain crops in similar countries and if one looks at milk yields and the improvement in breeding among our herds, one can see a remarkable success story of efficiency and high investment.

Mr. Dalyell: What about ethyl-alcohol problems?

Mr. Walker: I hope that that problem will be discussed next week. The Commission has made statements on rebates for the whisky industry, and has decided to give greater priority to the alcohol regime. I shall keep the hon. Gentleman informed of when, and how, that subject comes on the agenda.

Mr. Hill: Given that my right hon. Friend says that efficiency is of paramount importance to the United Kingdom, why is a very efficient industry such


as the pig industry slowly but surely disappearing from view? Is he not aware that our European competitors are being subsidised to such an extent that there will be no efficient pig industry left within a couple of years?

Mr. Walker: The facts about the pig industry, including the latest trends, show that the years in which our pig industry suffered from a 25 per cent. disadvantage as regards the MCAs, were disastrous and destructive to that industry. In one year, the Government have eliminated that disadvantage.

Mr. Home Robertson: Does not the Minister accept that the efficiency of British agriculture has suffered greatly in recent months, because the Government's policies have led to ridiculous interest rates?

Mr. Walker: That is why I know that the hon. Gentleman welcomed the reduction announced last week.

Mr. McQuarrie: Does my right hon. Friend agree that any loss of efficiency in the agriculture industry has resulted from a failure to agree a CAP, despite the fact that he is earnestly trying to do so?

Mr. Walker: Yes, Sir.

Common Agricultural Policy

Mr. Straw: asked the Minister of Agriculture, Fisheries and Food what are (a) the principles and (b) the objectives of the common agricultural policy.

Mr. Peter Walker: So far as the Government are concerned, the two are the same, and are the ones set out in article 39 of the Treaty of Rome.

Mr. Straw: Is the Minister aware that the two are not the same? Does he not accept that if he had studied the history of the CAP he would have realised that the principles are distinct from the objectives? The principles were enunciated at the Stresa conference and in a resolution of the Council in 1960. Those principles included market unity—[HON. MEMBERS: "Reading."] I am not reading. As the police say, I am just refreshing my memory. They included—[HON. MEMBERS: "Reading."]—market unity, Community preference and financial solidarity. Does not the Minister further accept that those principles will place the budget

review in a straitjacket, that cannot lead to any fundamental reform of the CAP?

Mr. Walker: I shall leave the hon. Gentleman to look after historic principles, while I look after the future objectives.

PRIME MINISTER (ENGAGEMENTS)

Mr. George Gardiner: asked the Prime Minister if she will list her public engagements for 17 July.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others, including one with Congressman John Anderson. Later today I shall be leaving for a visit to Wales.

Mr. Gardiner: Will my right hon. Friend find time today to consider that many school leavers, who have been hit by recession, desire to give some service to the community? Does she recognise that that desire extends to keeping essential services, such as hospitals, running in the event of strike action by those who have jobs?

The Prime Minister: I very much agree that large numbers of school leavers are anxious to give service to the community, including voluntary work. They expect to see essential services kept going. If a time were to come when those services were not kept going, young people would be the first to lend a hand.

Mr. Foster: Has the Prime Minister seen the latest forecast of the Manpower Services Commission, to the effect that in the first quarter of next year 400,000 16 to 19-year-olds will be unemployed, with only 100,000 places on the youth opportunities scheme? Is it not time to bring in an education and training programme for the 16 to 19-year age group, with proper educational and training allowances?

The Prime Minister: My right lion. Friend the Secretary of State for Employment has expanded the youth opportunities scheme to up to 250,000 places. We hope that we shall be able to continue the pledge to give all school leavers a place on that scheme by Easter 1981, if they have not found a job by then.

Mr. Kimball: Will my right hon. Friend find time today to study the Order Paper and to send for the Chancellor of the Duchy of Lancaster in order to draw his attention to the abuse of written questions? Will she also draw his attention to the proliferation of Select Committees by the other place, and the need for House of Commons expenditure to be subject to fixed cash limits? Will she give an assurance that there will be no revolutionary experiments in parliamentary procedure until we have digested the last revolutionary change made in October?

The Prime Minister: I believe that my right hon. Friend the Chancellor of the Duchy of Lancaster heard much of that question. My hon. Friend is right to say that there are no specific cash limits for Parliament. Naturally, we all believe that we should be firmly accountable to those whom we represent, and sparing in the way in which we spend their money. As regards future changes of procedure, I note that my hon. Friend thinks that we have had as much as we can digest for the time being, and I shall communicate that to my right hon. Friend.

Mr. Barry Jones: asked the Prime Minister what are her official engagements for 17 July.

The Prime Minister: I refer the hon. Member to the reply which I have just given.

Mr. Jones: Does the Prime Minister know that my beleaguered constituency has been told today that it will lose another 300 Courtaulds' jobs? Given the appalling economic prospects for Wales, will she announce in Swansea on Saturday a policy for industrial expansion? Will she also tell us what Wales has done to deserve her pitiless offensive against steel workers, textile workers and coal miners?

The Prime Minister: I am aware that there are some textile factories in the hon. Member's constituency which are in considerable difficulty. I believe that he has asked to see my right hon. Friend the Secretary of State for Wales about them. On the question of general measures, the hon. Member knows—because I have said it before—that we gave South Wales £48 million for remedial measures. We also gave £15 million for remedial measures to the Shotton area. A large number of advance

factories were allocated last year to provide 5,000 jobs. This year so far they have provided a further 2,500 jobs. Expenditure per head is £919 in England, whereas in Wales it is very much higher, at £1,079 per head.

Mr. Edward Gardner: Has my right hon. Friend had time to read the report that the Indian Government are considering altering their intentions about buying Jaguar aircraft from British Aerospace in the numbers that they orginally stated? Is she aware that this is a matter of deep concern to those in my constituency who work for British Aerospace? Does she not agree that we can ill afford to lose orders of this magnitude through the Machiavellian pressures that are being applied by other nations on the Indian Government?

Tile Prime Minister: We were very concerned yesterday at the terms of the announcement by Mr. Menon. There was an understanding between India and the British Government that if there was to be any variation in the Jaguar contract, the matter would be raised in consultation. That clause has not yet been invoked and if there were any suggestions about changing the contract we would expect the Indian Government to invoke it.

Mr. David Steel: Irrespective of whether press reports are correct about the Trident decision not being taken by the Cabinet as a whole, will the Prime Minister recognise that the Trident programme represents a major commitment, both in defence and public spending terms, which will last well beyond the lifetime of this Administration? As such, should it not have come to the House of Commons for discussion first?

The Prime Minister: The decision was taken in the customary way that such decisions are taken. All these major programmes outlast the lifetime of any Parliament. The Tornado programme was of a similiar order of expenditure and that, too, outlasted the lifetime of one Parliament. That is the case with most defence decisions. We shall expect to have a debate on the matter when, doubtless, the right hon. Gentleman will raise any issue that he wishes.

Mr. Hill: Is my right hon. Friend aware of the pleas of Sir Michael


Edwardes to buy British, and of the debates in the House last Thursday and Friday in which many hon. Members asked the House to send out the message to the nationalised industries and local authorities to buy British wherever -possible? Is this not a way in which the Government could help some of our industries?

The Prime Minister: We have a public purchasing policy that we should buy British wherever possible. Usually I add one rider to that—we buy British not only because it is British, but because we expect it to be of supreme value. We also believe that Government purchasing policy can assist firms to launch goods—particularly sophisticated technological goods—that they might not otherwise be able to launch on their own resources.

Mr. James Callaghan: Why then did the Cabinet not take a decision yesterday to place the order for the PAYE computer with ICL?

The Prime Minister: This matter is still being considered—[HON. MEMBERS: "Why?"]—because we are investigating it thoroughly, unlike previous Labour Governments.

Mr. Callaghan: Do not the criteria that the right hon. Lady has given apply to ICL? Why does not she stop dithering and get on with making the decision?

The Prime Minister: The matter is still under consideration. There are many computer firms here and we have to get the right computer for the job. The Cabinet is still considering the matter, and the Leader of the Opposition will not succeed in hustling me.

Mr. Nicholas Baker: In order to encourage the creation of new jobs, which are more likely to come from small and medium-sized businesses, will the Prime Minister encourage the banks and financial institutions to apply a greater share of their resources to venture capital enterprises for small and growing businesses on advantageous terms?

The Prime Minister: I wholly accept my hon. Friend's assertion that we need greater sources of venture capital. I believe that the banks are trying to help and that a number of consortia under British commercial and industrial cham-

bers of trade are similarly trying to help. I wholly accept my hon. Friend's wish that more should be available, particularly for small businesses.

Mr. Donald Stewart: Will the Prime Minister take time to study the statement on the tape by a prominent German politician who claims that the Government are preparing a further confrontation with a view to using it as an excuse to come out of the EEC? Is she aware that, apart from the obvious merits of that policy, if it is adopted, it will enable her to have at least one policy during her term of office which has the full-hearted consent of the British people?

The Prime Minister: I know of no such confrontation. We brought the budgetary matter to a satisfactory conclusion, and until we consider the future reform of the CAP and the fundamental change in budgetary policy, the next matter to consider is the common fisheries policy. My right hon. Friend the Minister of Agriculture has that firmly in hand.

Mr. Adley: asked the Prime Minister if she will list her official engagements for 17 July.

The Prime Minister: I refer my hon. Friend to the reply which I gave earlier.

Mr. Adley: Can my right hon. Friend confirm that since May 1979 the Government have repaid $4.6 billion of overseas debt, including $1.8 billion, ahead of schedule? Is not this a repetition of the normal practice in this country whereby Labour Governments incur debt and Conservative Governments repay it?

Mr. Skinner: A planted question!

The Prime Minister: The other day the Financial Secretary announced that we would make early repayment of a Eurodollar debt from 1977. The last Government increased this country's overseas indebtedness by $18 billion and this Government have already arranged to repay $4 billion of that.

Mr. Sheerman: Will the Prime Minister spend some time today considering the position of exporting industries in this country, particularly those in my constituency in Yorkshire which are being decimated by bankruptcies day after day because of Government policies which


are putting small, medium and large firms out of business? When will she change Government policy to enable our exporting industries to survive?

The Prime Minister: Has not the hon. Member noticed that the figures for the last two months have been rather good?

Mr. Richard Shepherd: Can my right hon. Friend help British manufacturing industry by ensuring that monopoly gas is provided to British industry at prices that are no greater than those paid by its competitors in Europe? Is she aware of the damaging effect of the recent price increases?

The Prime Minister: On the whole, gas prices to industry have provided the profit to the British gas industry. It has to explore for sources of gas to replace those that we have already used. I believe that our general policy is right—gas prices must follow oil prices and we must stick to the world price otherwise we shall be in great difficulty and run out of necessary supplies.

Mr. Dubs: Will the Prime Minister find time today to consider the recent OECD report, which shows that, compared with any other advanced industrial country, Great Britain has a greater increase in youth unemployment and a faster decline in gross national product? Could that be said to be a tribute to one year of a Conservative Government?

The Prime Minister: There are countries in Europe where the level of unemployment is higher than in Britain. We are all very concerned about increasing unemployment, which is unfortunately, inevitable in a period of world recession, from which we are all suffering. The price of oil having increased by 100 per cent. in a year, some measure of world recession is inevitable.

BUSINESS OF THE HOUSE

Mr. James Callaghan: Will the Leader of the House state the business for next week?

The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The business for next week will be as follows:

MONDAY 21 JULY—Supply [27th ALLOTTED DAY]: Debate on an Opposition motion on the Government's damaging policies towards publicly owned and supported industries.

Motions on Members' salaries, pensions and allowances.

TUESDAY 22 JULY—Progress on remaining stages of the Criminal Justice (Scotland) Bill [Lords].

Motion on the Northern Ireland (Emergency Provisions) Act 1978 (Continuance) Order.

WEDNESDAY 23 JULY—Third Reading of the Civil Aviation Bill.

Completion of remaining stages of the Criminal Justice (Scotland) Bill [Lords].

Motions on Northern Ireland orders on social security, treatment of offenders, and on criminal justice and Armed Forces consequential provisions.

THURSDAY 24 JULY—Remaining stages of the Coal Industry Bill.

Motion on the Coal Industry (Borrowing Powers) Order.

Proceedings on the Magistrates Courts Bill [Lords], which is a consolidation measure.

FRIDAY 25 JULY—Motions on Commission documents 8832/79 and 8476/80 on New Zealand butter, and No. 11571/ 79 and addendum 1 on protection of workers from harmful exposure to metallic lead compounds.

MONDAY 28 JULY—Supply [28th ALLOTTED DAY]: The subject for debate to be announced.

The relevant reports of the European Legislation Committee are as follows:

New Zealand Butter: 8th Report. 1979–80; HC 159-viii, paragraph 3. 38th Report, 1979–80; HC 159-xxxviii,


paragraph 4 (Not yet published, but photocopies available in Vote Office).

Metallic Lead: 27th Report, 1979–80; HC 159-xxvii, paragraph 1.

Mr. Callaghan: A question was asked earlier about procedure. I understand that there have been discussions through the usual channels, but is it possible to arrange a debate on procedure before the Summer Recess, instead of in the overspill time in October? Secondly, the Opposition's motion on the Government's damaging policies towards publicly owned and supported industries is the third in the series of debates in which we are censuring the Government on their economic policy. In order that we may adequately prepare ourselves, will the right hon. Gentleman advise us who is likely to be expounding the Government's case on Monday? Is it likely that the Paymaster General will be winding up. Thirdly, may we have a statement on what is happening over rate support in the local authority Bill, following the confusion that has arisen today, only two days after Third Reading? It is claimed that the Government are unable to work out the formula that they have foisted on the House. A statement would enable us to see that the confusion is being cleared up.

Mr. St. John-Stevas: I presume that the right hon. Gentleman is referring to the Local Government, Planning and Land (No. 2) Bill. It is a matter for my right hon. Friend the Secretary of State for the Environment, and I shall draw his attention to the right hon. Gentleman's remarks. The Government spokesmen for the debate on Monday will depend on the exact wording of the Opposition motion. As the right hon. Gentleman knows, it had been my intention, in furtherance of an undertaking that I had given the House, to have a debate on procedure before the Summer Recess. I have received representations from the official Opposition that it would be more convenient for them if that debate took place in the spill-over in October. I therefore agreed to that request.

Mr. Callaghan: I did not indicate the nature of the exchanges that took place through the usual channels but the right hon. Gentleman is clearly doing so. I merely said that there had been exchanges. Will the right hon. Gentleman

therefore also make clear that he intended to hold that important debate on Friday. It was that which we said was unsatisfactory.

Mr. St. John-Stevas: I do not believe that we should discuss representations in detail. I merely said that it was a request from the official Opposition. It was not through the usual channels. The request to change the timing of the debate was made direct to me, as Leader of the House. I was not requested to remove the debate from the Friday. Had that request been made, I should have considered it. I received a request to have the debate in the spill-over.

Mr. David Steel: When shall we have a debate on the Trident missile project? Secondly, as the right hon. Gentleman has failed to announce the date for the Summer Recess, is he prepared to receive a deputation of irate children of Scottish Members—children who have been on holiday since the beginning of July and who go back to school soon after mid-August? They would like to see their parents occasionally.

Mr. St. John-Stevas: I am sympathetic to the position of Scottish Members in particular, because of the dates of the Scottish school holidays. However, I am constantly receiving requests for more debates, including that which has just come from the right hon. Gentleman for a debate on the Trident missile. The request for that debate should be raised through the usual channels.

Mr. du Cann: Is my right hon. Friend aware that his statement about postponing the debate on procedure will have been heard with disappointment by many right hon. and hon. Members on both sides of the House? It is possible to take two views about procedural changes, but there is now on the Order Paper early-day motion 784, signed by 134 hon. Members.
[That this House welcomes the recommendations of the Procedure Committee in the last Parliament relating to the Public Bill procedure, whereby Standing Committees on certain Bills will be able to take evidence for up to three sessions before proceeding to the usual examination of the Bill; and would like to see this procedure implemented for an experimental period.]
That matter, together with the substantial catalogue of the Procedure Committee's recommendations, deserves to be seriously considered by the House at an early date. Will my right hon. Friend be good enough to reconsider the matter?

Mr. St. John-Stevas: I have seen that important motion. I am willing to reconsider the matter, if I have misunderstood the Opposition's request, and they objected to the Friday and not to having the debate before the Summer Recess. Perhaps the best course would be to have further discussions with representatives of the Opposition.

Mr. James Callaghan: I am sure that that is right, in case there is any misunderstanding. I regret that the Leader of the House has disclosed some of what has passed through the usual channels. Hon. Members will understand the need for such discussions on the arrangement of business. My understanding was that the debate was proposed for next Friday, which was not satisfactory. I suggest that there should be further discussion.

Mr. St. John-Stevas: I gave a pledge to the House that we should have the debate on procedure before the Summer Recess. When I received a direct request from the Opposition spokesman on procedure to postpone the debate to the spill-over period, I agreed, because I had to consider the Opposition view as well as the Government view. However, if the objection is only to the Friday, as the right hon. Gentleman has suggested, I shall reconsider the position. In fairness to the House and to myself, it was necessary for me to reveal the reason for the changed arrangements.

Mr. Callaghan: I do not know why the Leader of the House is making such a meal of this matter. I was merely seeking to release him from the undertaking that he had given that there would be a debate before the end of July. We thought that that was a sensible thing to do, because we thought that it was not sensible to have the debate on a Friday.
The right hon. Gentleman immediately got into a huff about that and started to disclose what passed in communications between him and someone else. There will be objections, I dare say, from some, but if it is convenient to put off

the debate until the October overspill, the Opposition are ready that the right hon. Gentleman should do so. In any case, we should not have it on a Friday. That is all.

Mr. St. John-Stevas: I am my usual calm and equable self; I am not in a huff over the matter. I am merely trying to meet the legitimate wishes of the Opposition and the House. It seems that there is a strong expression of opinion in the House for the debate. I therefore propose to reopen the discussion with the Opposition spokesman on procedure to see whether an amicable arrangement can be arrived at.

Mr. Higgins: Does my right hon. Friend agree that it would be inconsistent for the Government to ask hon. Members to set an example on pay by restricting their increase to 9·6 per cent. while asking them to approve Estimates that give increases of more than 20 per cent. to civil servants? Will he consider whether, on Monday, we should have an opportunity of discussing Estimates as well as hon. Members' pay?

Mr. St. John-Stevas: I shall not go into the substance of that argument, but one of the most urgent matters before the House is the need to devise a better means of controlling Estimates and granting Supply. That question will be relevant when the debate on procedure is held.

Mr. Ashley: Has the Leader of the House had a chance to read the report of the social services Select Committee on perinatal mortality, which shows that the Government could prevent the deaths of 5,000 children and the disablement of a further 5,000 each year for the investment of a mere £25 million? I am sure that the right hon. Gentleman agrees that it is an important matter. Does he also agree that it is an urgent matter, which requires a debate?

Mr. St. John-Stevas: I have glanced at the report, which has just been published, but I have not had time to study it fully. I agree with the right hon. Gentleman that it is an important report and a valuable contribution to our knowledge of the subject. It is important that before we have a debate we should have a considered response from the Minister concerned.

Mr. Cormack: Does my right hon. Friend agree that it would be appropriate for the House to mark the distinguished service to the nation of Her Majesty the Queen Mother? Has he any proposals to that end?

Mr. St. John-Stevas: I agree with my hon. Friend that it would be fitting for the House to mark the occasion in some way, and conversations on that matter are proceeding through the usual channels.

Mr. Haynes: I know that the Leader of the House is aware of what happened in my constituency at the jazz band festival in Kirkby in Ashfield on Sunday. Will he arrange for a statement to be made to the House so that we can do away with the speculation that is going on and cool the thing down?

Mr. St. John-Stevas: I sympathise with the hon. Gentleman. The point has also been raised by another hon. Member who has a constituency interest. When the hon. Gentleman brought the matter to my attention I immediately raised with my right hon. Friend the Secretary of State for Social Services the question of the illness, or whatever it was that overtook the children. We discussed whether a statement was necessary and I was advised that it was not. However, my right hon. Friend promised that the Minister for Health would get in touch with the hon. Gentleman and explain the situation.

Mr. Bruce-Gardyne: Further to the question of my right hon. Friend the Member for Worthing (Mr. Higgins) and the Leader of the House's reply, will my right hon. Friend look hard at the proposition that, whatever the timing of the debate on procedure, the House ought to be given an opportunity to debate the Summer Supplementary Estimates before we are asked to vote on them?

Mr. St. John-Stevas: I cannot give an undertaking on that because it would presume conclusions that the House may reach in the procedure debate. However, when we discuss the remaining proposals in the procedure report, it is vital that we should add a consideration of the important question of the way in which the House controls Supply.

Mr. Arthur Lewis: As we understand that the Government are reducing the Boyle committee recommendations for psychological reasons—there cannot be any other reasons—and as the Prime Minister refuses to take action to reduce the £68,000 a year tax-free salary, plus expenses, of Mr. Roy Jenkins, will the Leader of the House take action before Monday to stop Mr. Jenkins getting a £90,000 tax-free termination grant at the end of his three-year stint? Such action would be psychologically popular with every hard-working man and woman in this country. Will the Leader of the House bear in mind that Mr. Jenkins is the man who invented a prices and incomes policy for everyone but himself?

Mr. St. John-Stevas: The hon. Gentleman has made his point, but I have enough trouble with the salaries of hon. Members without taking on the question of the salaries of members of the Commission.

Mr. Hill: Will my right hon. Friend, with his usual sensitive approach to the House, realise that many hon. Members who represent seaports are waiting—some with anxiety and some in hope—on the future of the British Transport Docks Board? Can he give the House an idea when that matter will be debated?

Mr. St. John-Stevas: That is an important matter, but I am being asked, on the one hand, to see that the House rises early for the recess and, on the other, to arrange for more debates. I have to try to reconcile those irreconcilable objectives, and I cannot promise my hon. Friend an early debate.

Mr. Pavitt: Is the right hon. Gentleman aware of the dismay of hon. Members in all quarters of the House who feel compassion and concern for the Third world at Foreign Office pronouncements this week on the Brandt commission report "North-South"? Will he arrange for the Government to make a statement on whether those pronouncements represent Government policy?

Mr. St. John-Stevas: I cannot promise a statement, but it is the considered view of the Government that the relationship between the developed world and the under-developed world is one of the most


important and vital problems facing us all.

Mr. Peter Bottomley: When may we expect a debate on the child benefit up-rating order? Will my right hon. Friend find out through the usual channels whether a Supply day could be used for a discussion on the general position of child benefits, which seem to be slipping in value, so that hon. Members on both sides can discuss ways of sacrificing other things to make sure that child benefit at least keeps in line with inflation and preferably goes above it for several years?

Mr. St. John-Stevas: I hope that the order will be debated before the Summer Recess. The use of Supply days is a matter for the Opposition.

Mr. Faulds: When does the right hon. Gentleman intend to unveil his Department's scheme for a public lending right which we, on the Labour side, introduced, which is long overdue and which, in his March statement, was promised for this summer?

Mr. St. John-Stevas: I do not think that the hon. Gentleman is accurate. The proposals for the public lending right are on schedule. The consultative document was published at the time it was said that it would be published. The replies have now been received. In the autumn I shall be able to come forward, on schedule yet again, with the Government's proposals. Although I am grateful for the fact that the Opposition have supported this measure, it is important to know that it is one that commands all-party support as well as all-party opposition.

Mr. Stanbrook: Is my right hon. Friend aware that there is concern on both sides of the House about the way in which Attorneys-General of this and previous Administrations have exercised their right not to prosecute in cases where there is ample evidence to do so? Will he provide time for a debate on this general subject?

Mr. St. John-Stevas: I am afraid that I cannot do so before the Summer Recess.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to allow the questions to run until 4 o'clock.

It therefore depends on the length of hon. Members' questions how many hon. Members will be called. I do not propose to call anyone except those who have already been rising in their places.

Mr. Greville Janner: At a time when unemployment among young people is growing, may we have a debate on the careers service and, in particular, on what I am sure the right hon. Gentleman would regard as the very great evil of cutting that service, especially for young handicapped people, as is happening in the Tory-controlled county of Leicestershire?

Mr. St. John-Stevas: I have already replied several times to the hon and learned Gentleman on this point. I have looked into the situation with regard to the Leicestershire county council. I have nothing to add to what I have said on previous occasions.

Mr. Christopher Price: May I draw the attention of the Leader of the House to Early Day Motion No. 803?
[That this House congratulates the 'New Statesman' on publishing further evidence of the development of electronic eavesdropping in the United Kingdom; notes with alarm that the United States National Security Agency operates, without clear legal authority, a surveillance system in the United Kingdom on international telephones and telegrams which is centred at Menwith Hill, near Harrogate; and calls for a comprehensive statement by the Home Secretary on the activities of his and related centres and the collaboration of the Post Office in this anti-democratic venture.]
This calls attention to the serious allegations made today, from which it is clear that illegal telephone tapping is taking place, by United States authorities, of individuals and foreigners in this country? May we have a debate next week so that these matters can be canvassed? Will the Leader of the House do another act of supererogation and read the New Statesman again this week?

Mr. St. John-Stevas: Since I was directed to the New Statesman by the hon. Gentleman I have found it addictive and I have been reading it every week regularly since. On the question of the interception of communications and connected matters, a statement was made and a


White Paper was laid by the Home Secretary on 1 April. In accordance with long-standing practice, I am afraid that no Minister is prepared to answer questions on those matters.

Mr. Foulkes: Will the Leader of the House say why it is taking such an extraordinarily long time to report the outcome of the all-party talks on the government of Scotland? When can we now expect such a report? Will the right hon. Gentleman give an assurance that there will be a debate similar to that on devolution for Northern Ireland?

Mr. St. John-Stevas: I agree that it is taking rather a long time. Discussions are proceeding. The report is agreed. I hope that we shall shortly be able to publish it.

Mr. Meacher: Is the right hon. Gentleman aware of the long list of excellent recommendations by the Home Affairs Select Committee in its recent report on deaths in police custody, which shows how many and serious are the deficiencies of the present system? Since this indicates the need for urgent reform, will the right hon. Gentleman, in conjunction with the Home Secretary, arrange for an early debate on the subject?

Mr. St. John-Stevas: We must await the considered response of the Home Office to that important report. I agree with the hon. Gentleman that it is a most valuable report. In particular, it has laid to rest some of the fears that a certain number of people entertained about this subject.

Mr. Hooley: Is the Leader of the House aware that if we do not have a debate on procedure before the recess this will be the second time in successive weeks that he has broken a firm commitment to the House—the first on Boyle and now on procedure? Is he aware that procedure is a matter for the whole House and not simply for the arcane shenanigans that go on in the usual channels?

Mr. St. John-Stevas: I shall clearly have to reconsider the whole matter in response to the representations that have been made from all sides of the House. I must take into account the wishes of the Opposition. I will discuss the matter with the Opposition spokesman. We will take into account the views of the Oppo-

sition and the views expressed by Back Benchers on this occasion.

Mr. Ioan Evans: In view of the House's overwhelming support for the Brandt Commission's report, and the report that the Prime Minister was leading the opposition in the meeting of Western leaders, as seems to be confirmed by the evidence sent to the Foreign Affairs Select Committee, will the right hon. Gentleman arrange an early statement on the Government's position?

Mr. St. John-Stevas: I am afraid that I cannot promise a further statement on that matter. We have had at least two debates on the Brandt report.

Mr. Newens: Earlier this week the Secretary of State for Defence indicated that he would welcome a debate on the Trident decision. Does the Leader of the House's reply to the leader of the Liberal Party today indicate that the Government do not intend to provide a debate in their own time or of their own volition? Surely, a decision that involves the expenditure of £5,000 million deserves the time of the House, not necessarily before the recess but certainly in the foreseeable future, before we go ahead on the matter.

Mr. St. John-Stevas: I concede that that is not an unreasonable point. It is a matter that will have to be discussed through the usual channels.

Mr. Canavan: May we have a statement next week from the Minister of State, Foreign and Commonwealth Office—the hon. Member for Blackpool, South (Mr. Blaker)—about why he has had a threatening lawyer's letter sent to the editor of a magazine because of a report of the Minister's failure to answer my parliamentary questions about the death of Inspector John MacLennan, of the Hong Kong police force? Does the belated decision to hold a commission of inquiry into this case not indicate that many questions have still to be answered?

Mr. St. John-Stevas: I do not know anything about the details of the correspondence, but I will draw the matter to the attention of my right hon. Friend.

Mr. Skinner: May we have a statement shortly on the question of BBC finances? Is it not a scandal that in the seventh week of the musicians' strike the


BBC is still threatening to throw 172 musicians out of work? How does the right hon. Gentleman reconcile that situation with the BBC's display of double standards in supposing to save money on cutting back the number of hours for screening the Olympic Games but, at the same time, sending 69 people to the Games—two more than the total British athletics team?

Mr. St. John-Stevas: That is a matter for the BBC; it is not a matter for me as Leader of the House. One thing I hope about this dispute is that it will be settled to the extent that the Proms will be able to take place as scheduled.

Mr. Kilroy-Silk: Will the Leader of the House accept that a subject as important as procedure, and awaiting debate, is that of the prison system? He has consistently promised that there would be a debate before the Summer Recess. Will he confirm that we shall be debating that subject even if, reluctantly, the Government have to show the low priority that they continue to give to it, by holding the debate on a Friday?

Mr. St. John-Stevas: I am most anxious to have a debate on that subject, but I am afraid that it may have to be on a Friday. I hope that there are not many Fridays left, but I will try to get it in, if I possibly can, to oblige the hon. Gentleman.

Mr. English: The setting up of a Procedure Committee is a different thing from the procedure debate. Is the right hon. Gentleman aware that it will help the Officers of the House and the House as a whole if it can be set up in time to have a deliberative session before the recess?

Mr. St. John-Stevas: I note what the hon. Gentleman said. This will be one of the matters that I can add to the discussions that will be taking place on the subject. It is clear from what has been said that there is a strong desire in the House to have a debate.

Mr. Winnick: Will there be a statement next week about efforts by the Department of Employment to see that The Observer newspaper does not close in 90 days' time? Is it not totally un-

acceptable for the owners to express any intention to close down the newspaper? Is it not necessary for action to be taken by the Government to see that it does not close?

Mr. St. John-Stevas: That is a matter for the newspaper proprietors and the unions. It would be a tragedy if The Observer ceased publication, because it is one of our great national newspapers.

Mr. Cryer: I return to early-day motion 803 and the activities of the United States National Security Agency revealed in the pages of the New Statesman. Surely in a democracy we have a right to expect a Minister to answer the detailed charge and allegation that a foreign Power is exercising telephonic eavesdropping in Britain through a network of illegal operating stations. If a Minister does not make a statement to the House may we not assume that the article is right and that the Conservative Government are condoning illegal activity?

Mr. St. John-Stevas: There is a longstanding tradition in the House that Ministers do not answer questions on the interception of communications—save the Home Secretary in a most general manner. Replying to all the accusations made against the Government in the New Statesman would be a full-time job.

Mr. Speaker: I thank hon. Members for co-operating. It shows what can be done. It is an interesting lesson for me.

Mr. Faulds: On a point of order, Mr. Speaker. What come-back does a Member have within the Chamber if a Minister, unwittingly and unknowingly of course, makes an incorrect statement? If the Chancellor of the Duchy of Lancaster checks with his Department he will find that a statement issued in March promised the public lending right scheme this summer. I am prepared to accept a letter of apology privately from the right hon. Gentleman, but would it not be more courteous if he admitted to the House that the time scale has slipped and that he was incorrect in his reply to me?

Mr. Speaker: That is not a point of order on which I can rule. I have no doubt that what the hon. Gentleman said has been heard.

PUBLIC ACCOUNTS COMMITTEE

Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. On page 4971 of yesterday's Order Paper entry 13 announced that the Public Accounts Committee was to meet in public session that day on the subject of "Cash Limits provisional outturn" with "Sir Anthony Rawlinson, KCB, Second Permanent Secretary, H M Treasury" as its witness, at 4.45 pm.
In the event, without notice to the House, the Public Accounts Committee chose to sit in private and not for the purpose declared both on the Order Paper and on official notices exhibited throughout the Palace of Westminster. I exercised my right as a Member of the House to be present at the private session of the Committee yesterday afternoon because I guessed that the Committee's true intention was not that of which it had given public notice, but was instead, and secretly, to examine Sir Frank Mc-Fadzean, chairman of Rolls-Royce (1971) Ltd. and to afford him the opportunity, inter alia, to refute the untrue and—

Mr. Speaker: Order. I am sorry to interrupt the hon. Gentleman, but he will know better than most that he cannot refer to what went on in a private session of a Select Committee. I shall give him a ruling on his point of order afterwards.

Mr. Maxwell-Hyslop: I am grateful, Mr. Speaker. I am reporting to you about my guess, before I entered the room, of what was to happen. I guessed that the Committee's true intention was not that of which it had given public notice but was instead, and secretly, to examine Sir Frank Mc-Fadzean, chairman of Rolls-Royce (1971) Ltd. and to afford him, inter alia, the opportunity to refute the untrue and disgraceful allegations made against Rolls-Royce under privilege on the Floor of the House and not withdrawn by a Front Bench spokesman for the Labour Party—the hon. Member for Birmingham, Perry Barr (Mr. Rooker). I may not, of course, reveal whether my guess was correct.
I do not challenge the right of the Public Accounts Committee, by resolution, to exclude the press and the public from its proceedings by going into private session when the circumstances warrant

that course. However, the most important protection against the abusive employment of the private session procedure is the right of hon. Members who are not members of the Select Committee to be present at its proceedings, including private sessions.
By exhibiting a false notice of its proceedings yesterday and by failing to give accurate notice of witnesses actually examined, the Public Accounts Committee, or whoever was responsible for giving such accurate notice to hon. Members, in effect prevented the attendance of many hon. Members who, in my judgment, would have wished to be present had they been made aware of the true business that the PAC intended to conduct at its meeting yesterday by exercising their right to be present and hearing the evidence that they were entitled to hear.
At this late stage the only action that can, even in part, remedy the damage done to the House by the false notice and lack of accurate notice of yesterday's proceedings in the PAC is for that Committee to report to the House forthwith the verbatim record of the examination of witnesses at yesterday's private session.
Apart from that, as you accept a general responsibility for the Order Paper Mr. Speaker, what protection does the House have from being further misled and abused by a repetition of yesterday's events?

Mr. Speaker: The hon. Member gave me notice that he would seek to raise this point of order. For that I am deeply grateful. The hon. Member will not, of course, expect me to rule on his guesswork as to what went on in that Committee. I am even more ignorant than the hon. Gentleman of that. On his guesswork I cannot rule.
It is not for me to rule or to give guidance on the actions of particular Committees, and I do not propose to do so today. However, since the hon. Gentleman indicated that the form and substance of an entry appearing on the Order Paper is my responsibility, I should say that it has never been the practice of a Committee to show on the Paper the names of witnesses whom it proposes to examine in private. Indeed, the displaying of names of witnesses is a comparatively recent change, which has developed


with the increasing tendency of Committees to hear evidence in public.
I can see no good reason why there should be any change in the practice in respect of evidence heard in private. Hon. Members will know that the Committee gave notice on the Order Paper yesterday that it was sitting in private as well as in public.

Mr. Maxwell-Hyslop: Further to that point of order, Mr. Speaker. The notice about the private sitting referred only to a time between 4 o'clock and 4.45 pm. The Order Paper stated clearly that from 4.45 pm onwards the session would be in public. Even if it is not customary to give the names of witnesses in private sessions there can be no excuse for misleading hon. Members by claiming that one witness is to be examined when there is no intention of examining that witness, and another witness is to be examined instead.

Mr. Speaker: I think that I can help the hon. Gentleman. The witness named on the Order Paper was examined. Hon. Members were misled only to the extent that—as it sometimes is said that there will be a Division at 7.30 pm and it takes place at 8.30 pm or 10 o'clock—the private sitting went on a little longer than expected. The public examination and questioning of the witness named on the Order Paper did take place.

Mr. Foot: Further to that point of order, Mr. Speaker. I think that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) was right to raise the matter. It raises questions in which the House will be further interested. For example, there is a question here, as I understand it, that although we do not know exactly what occurred we know that a witness was being called who might have given evidence that referred to further statements that have been made to the House by an hon. Member. He also, therefore, might be interested in what should have occurred. Whether the matter was to be transacted in public or in private would also be a matter of interest to him.
If the nature of the business was altered in that way, surely it is a matter for consideration. Perhaps, Mr. Speaker, you could give us a further ruling—not necessarily today—about what may be the position of the hon. Member involved

in such circumstances, because he, surely, should have the right to know what was to occur before such a Committee, particularly because he has, of course, been insisting for a long time that he wished to give his evidence to such a Select Committee.

Mr. J. Enoch Powell: Further to that point of order, Mr. Speaker. I wonder whether you would be good enough to clear up a minor point arising out of your ruling. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) referred to your responsibility for the Order Paper of the House and in your ruling you referred to the list of Committee sittings as being part of the Order Paper. Will you confirm that they actually are such a part of the Order Paper, or are not, despite the fact that the running title in the print covers them?

Mr. Joel Barnett: Further to that point of order, Mr. Speaker. I in no way disagree with the point made by my right hon. Friend the Member for Ebbw Vale (Mr. Foot) about the need for the House, perhaps, to decide whether we should pursue existing rules. I am delighted that you were at least able to put the hon. Member for Tiverton (Mr. Maxwell-Hyslop) in his place as to the existing rules.
In fairness to myself and the members of my Committee, I think that I should put the facts right both as to what the hon. Gentleman told the House today and what he, apparently, told The Times yesterday. The accurate version of what took place yesterday is that the hon. Gentleman was not ejected from my Committee. He left voluntarily when we were having a deliberative session, returned when we were in private session—I am glad to see him nodding—and was certainly not ejected. He sat there throughout. The time when we go into public session, as you know, Mr. Speaker, is flexible, depending on when we finish with witnesses in the private session.
That is what happened. The hon. Gentleman left when we went into public session. He obviously does not know what happened then. Obviously, for reasons that everyone will understand, I cannot comment on what went on in the private session.

Mr. Speaker: May I say in reply to the right hon. Member for Ebbw Vale


(Mr. Foot), before we get mixed up and complicated, that I am quite sure that every Select Committee in the House would bear in mind that if any hon. Member were under scrutiny of any sort that hon. Member, of course, would be notified in accordance with the ordinary courtesies by which we notify each other? We do not know what went on in the Committee, but we normally notify each other.

Mr. Skinner: Further to that point of order, Mr. Speaker. As you know. I take a somewhat different view about Select Committees. I have, on occasions when these matters have been dealt with, voted along with my right hon. Friend the Member for Ebbw Vale (Mr. Foot). Is this not another, and dangerous, example whereby this kind of sloppy consensus, which is the basis of the activities of the Select Committees, can find it comfortable to avoid calling people who might be prepared to stick their necks out on some occasions? This occasion showed distinctly that an hon. Member who was prepared to state certain things that were widely examined in public, and on which he was prepared to give evidence to another Select Committee, should have been told, forthrightly, by everyone on that Committee that he had an opportunity to be present. He should have been told exactly what was taking place. On this matter many of us take a different view from the sloppy consensus view that has formed around what is known as "the Rooker case".

Mr. Speaker: Let me say to the House that we must not get embroiled in the details of what goes on in the Select Committees, because I am not answerable for them here.

Mr. Douglas: Further to that point of order, Mr. Speaker. As a member of that Committee, and without in any way disclosing what took place at the private session, I ask whether it is not right that if any member of a Committee, or of the House, had it in mind to raise the question of the activities of any hon. Member in front of any witness, the obligation would be upon him to inform that hon. Member, regardless of whether the Committee sat in private or in public.

Mr. Speaker: That course of action is one of our normal courtesies in the House. It is a matter of courtesy even if one hon. Member intends to refer to

another. If possible, a message is sent to the hon. Member concerned.

Mr. Cryer: Further to that point of order, Mr. Speaker. If I may detain the House for a moment, we are entering into a new aspect of the business of the House of Commons. The Committee that we are discussing is one of two long-established Committees. However, we have appointed many more, and the point raised by the hon. Member for Tiverton (Mr. Maxwell-Hyslop) is basically that with the new Committees examining more people than ever before we should take a fresh look at the adequacy of the notification to hon. Members, so that we can exercise our rights to attend Select Committees.
There will be occasions when an hon. Member might well ask a question about another hon. Member, on the spur of the moment and without preparation, and will not be able to conform to the convention. Indeed, the complexities of Committees is growing to such an extent that that sort of convention may be a little too complicated to obey in the event. I would have thought that a great safeguard would be to give as much detailed information and notice to hon. Members so that they could go to private sessions and exercise their right of safeguard, as I am sure would have happened to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker).

Mr. Speaker: I believe that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) has done the House a service in raising a very important matter—not for the first time. However, I think that this is a matter for the usual channels to talk about and to discuss.

Mr. St. John-Stevas: I have listened to the exchanges with great interest. I believe that my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and the hon. Member for Keighley (Mr. Cryer) have raised an extremely important matter. If it is of assistance I shall look into the matter to see whether there is something wrong that needs to be put right. Of course, as my hon. Friend has pointed out, it is the right of any hon. Member to attend a meeting of a Select Committee, whether it is in private or in public. An hon. Member can be requested by the Chairman to withdraw, but he cannot be expelled.

Mr. Speaker: The House will be grateful to the Leader of the House.

Mr. Roper: The Votes and Proceedings of yesterday's Committee are not available in the Vote Office, but I assume that the Public Accounts Committee—as is normal with Select Committees—has reported its Votes and Proceedings to the House and that they are lying on the Table. Is it, therefore, still the case that the identity of the witness is a secret?

Mr. Speaker: The Select Committee has reported the minutes of part of the public evidence but not the private part.

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:
1. Coroners Act 1980
2. Social Security (No. 2) Act 1980
3. Licensing (Amendment) Act 1980
4. Films Act 1980
5. Pier and Harbour Order (Brighton West Pier) Confirmation Act 1980
6. Greater Manchester Passenger Transport Act 1980
7. Friends Meeting House (Reigate) Act 1980
8. Clifton Suspension Bridge Act 1980
9. British Olivetti Limited Act 1980
10. Eagle &amp; Globe Steel Limited Act 1980
11. Yorkshire Woollen District Transport Act 1980
12. Standard Life Assurance Company Act 1980
13. Edward Berry and Doris Eilleen Ward (Marriage Enabling) Act 1980
That is a good note on which to finish.

Orders of the Day — FINANCE (No. 2) BILL

Not amended in the Committee, and as amended in the Standing Committee, further considered.

Orders of the Day — Schedule 7

STOCK RELIEF

Mr. Richard Page: I beg to move amendment No. 178, in page 112, line 26, leave out from 'that' to end of line 28 and insert
'the amount of the charge shall be deferred to the next period of account'.

Mr. Speaker: With this we may take the following amendments:
No. 179, in page 112, line 29, leave out from beginning to end of line 11 on page 113.
Government amendment No. 29.
No. 180, in page 112, line 29, leave out from 'is' to 'but' in line 31 and insert
'the charge under the said paragraph 2(1) or 10(1)'.
No. 181, in page 112, line 31, leave out from 'charge' to end of line 38.
Government amendments Nos. 30 and 31.
No. 182, in page 112, line 39, leave out from beginning to end of line 11 on page 113.

Mr. Page: The amendments stand in my name and the names of my hon. Friends who are members of the Conservative small business committee.
I thank you for selecting the amendments for discussion, Mr. Speaker, because they give us an opportunity to discuss once more the question of stock relief and will enable us to secure clarification of what we were told in Standing Committee. It was made clear there that the deferral system is designed to accommodate temporary dips in stock at the year end and not destocking. I regret


that I feel that the whole concept does not go far enough in helping companies with their liquidity problems. Most of our companies are placed in a nutcracker. On one side they want to reduce their stocks, improve their liquidity and reduce their various interest charges. On the other side, if they do so, they lose stock relief and become liable for corporation tax.
Whether the relief is for destocking or temporary dips, a lot of confusion has been caused by the statement by my right hon. and learned Friend the Chancellor in the Budget when he announced the deferral proposal for companies, saying that he was doing it because he was
concerned about the recovery charges which they will face as a result of reductions in stock levels likely to arise either because of the general pressure on liquidity, or in some cases as a result of the steel strike."—(Official Report, 26 March 1980; Vol. 980, c. 1467–8.]
The amendments are aimed at trying to ease the liquidity problems. The first of them seeks to reduce the 5 per cent. restriction on initial stock from any deferral allowance. I am well aware of the arguments that the 5 per cent. will remove the borderline cases, with all the paperwork that is involved, and that it will enable the money that is available to be concentrated where the help is most needed. But any company that has managed to hold its stock level over the last year has already achieved a reduction in real terms of about 15 to 20 per cent. The additional 5 per cent. will hit at its liquidity even harder.
Perhaps I may draw a parallel for my hon. Friend the Financial Secretary that he may find familiar. Excess public expenditure over revenue and the resulting inflation are to the economy rather like a drug to an addict, and to kick the habit will be an extremely painful and difficult experience. I do not lay the cause of inflation at the door of our companies and smaller businesses. It should be laid, more rightly, at the door of the Labour Government. In kicking the habit this area of industry deserved more help and greater relief since it is an important contributor to the gross national product.
I do not wish to appear ungrateful on this matter. In view of the presence on the Notice Paper of Government amendment No. 29 I shall not take the

time of the House in dealing with any of my amendments on net indebtedness. I welcome the Goverment amendment because it will be of considerable advantage to smaller businesses, and in putting it forward the Government have recognised and responded to the difficulties that the prevous proposals would have caused for them. It will also remove any suggestion of a relative advantage for the larger companies as opposed to the smaller companies. The larger company of a vertically integrated nature can, I am sure, handle this whole question of net indebtedness far better than the smaller business. I do not propose to labour the point, but simply express my appreciation and welcome for the Government's action in this respect.
The last of my amendments deals with companies experiencing stock drop over two years. Current conditions demand an immediate repayment of the deferral allowance and the loss of stock relief immediately at the end of the second year. I cannot see why the Government cannot provide that at the end of the second year a company, while having to pay the amount of its deferral for the first year, could be allowed in turn a deferral for the second year in respect of the amount of stock drop. I appreciate that my hon. Friend has to be careful over the money that he spends. However, any company that experiences stock drop over two years will, when it recovers, simply get all the money back under the stock relief proposals. These provisions could mean unnecessary paperwork and the unnecessary shunting around of money. It will cause companies liquidity problems, probably when they most need that liquidity. If a company were then to close down, the money from any stock relief or allowances would automatically revert to the Government.
To be fair, I can see why, at the moment, my hon. Friend feels that he must not play his card of extending deferral into the second year. Equally, I am sure that he can see why I believe that companies would be able to plan much better if they could anticipate a second-year deferral. I hope that my hon. Friend will not slam the door this afternoon, but will leave it and his options open for next year, when he may wish to take the opportunity for a further deferral.
I am seeking change over and above what has been proposed by the Government. It would be churlish of me and my colleagues on the small business committee not to express our extreme appreciation of what the Government have done in respect of temporary dips, particularly amendment No. 29, which will be particularly helpful to smaller businesses.

Mr. Tam Dalyell: We all know from our constituency experience that many small businesses face a very serious problem. In many cases it is of a temporary nature, but it is no less serious for that. Given that there are liquidity and cash flow problems, one wonders whether the amendment moved by the hon. Member for Hertfordshire, South-West (Mr. Page) is the way to deal with such problems. Is stock relief the tool to use? I wonder whether the issue is more related to bank lending. I have not read it yet in detail—these are matters for the recess—but there is a finding in the Wilson committee report. It concluded that the banking system has become significantly more competitive since 1971 and does not believe that the clearing banks have abused their market power. In the first instance, should not the banks deal with those problems rather than introducing this sort of amendment to the Bill? If the amendment is accepted, what will be the price tag?

Mr. John Loveridge: I rise briefly to support the remarks of my hon. Friend the Member for Hertfordshire, South-West (Mr. Page). He has done the House a service by bringing forward the amendment. I am grateful to the Government for responding, in part, on the question of stock relief recovery deferment. At a time when there are forecasts of de-stocking in industry amounting to £1½ billion in the current year, it is obvious that stock relief is a serious matter for many businesses whose liquidity may be deeply affected. If firms are not liquid, they cannot invest or employ more workers. Unemployment is a critical factor in the economy.
I hope that the Government will heed my hon. Friend's remarks about next year and think deeply before rejecting any hope for an extension of the relief, which

should be over a period of two years. I ask them to reconsider the matter next year. In the meantime, the small business community is grateful for the complex relief given by the Government, although, by itself, it is not enough.

Mr. Allan Stewart: I rise briefly to emphasise the importance of amendment No. 179, introduced by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page). There was considerable debate in Committee about the proposal that the restriction on deferment should be by reference to net indebtedness. Both sides of the Committee, including the Opposition Front Bench, expressed concern about the matter. There was evidence of concern from a number of professional institutes and other bodies that were extremely worried about that point.
I do not want to talk about the point of principle, although it is fair to say that the concept of net indebtedness introduces a new feature into the stock relief system because it is not directly relevant in calculating either relief or clawback. Many people, both in the accountancy world and in industry, feel that there will be serious difficulties for companies arising from the introduction of the new concept because of the administrative burdens of sorting out difficult points in accountancy practice. My hon. Friend the Member for Hertfordshire, South-West welcomed Government amendment No. 29, which is desirable. It reinforces the case for dropping the net indebtedness restriction because it concedes that the restriction is inoperable except when considerable resources are expended.
I do not know whether, at this late stage, it is possible for the Government to consider accepting amendment No. 179. I emphasise that there remains considerable concern about the impact on companies of continuing the net indebtedness restriction.

The Financial Secretary to the Treasury (Mr. Nigel Lawson): Amendments Nos. 178 to 182, in the names of my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) and others of my hon. Friends, are identical, word for word, with the five amendments on this point that we debated at considerable length in Committee. They are


none the worse for that. I was unable to reply in Committee because I was in Luxembourg, at a Budget Council. I have read the reply given by my hon. and learned Friend the Minister in Hansard, in columns 506–512. That reply was impeccable. I do not wish to make a single embellishment to it.
We looked hard at the two main points made, namely, confining relief to a single year and the problems alleged to arise from the trade credit restrictions. On the former point, we do not see our way to extending the time beyond one year. It is essentially a temporary dips scheme. But I assure my hon. Friends that that is not our last word. In his Budget Statement my right hon. and learned Friend the Chancellor of the Exchequer said that there would be consultations on various aspects of the stock relief scheme in time for legislation in the next Finance Bill. A Green Paper on corporate taxation will be published before the end of the year, and stock relief is an important aspect of corporate taxation. There will be full discussions on the Green Paper to pave the way for legislation next year. There are many aspects of company taxation that are unsatisfactory. It is clearly time for a full consideration of the matter.
This year we have been able to introduce improvements in the stock relief scheme. They are embodied in Government amendments Nos. 29, 30 and 31. The hon. Member for West Lothian (Mr. Dalyell) asked about the cost. Before answering that point, I wish to say that I am grateful for the approval of my hon. Friends for what we have done already. I recognise that they wanted us to go further, but they recognise that we have gone a long way. The original stock relief proposals would have cost £210 million this year and £125 million next year. Improving the scheme in the way that I shall explain later will add a further £25 million this year and a further £15 million next year. About £¼ billion of relief will be given this year.
The amendments will increase the amount originally provided in the Bill by £40 million over this year and next year combined. That is not a negligible amount. We cannot see any cause to

resile from the principle of a credit restriction in the temporary dips scheme. We accept that the calculation of the present restriction is not always an easy, straightforward or simple matter, as my hon. Friend the Member for Renfrew-shire, East (Mr. Stewart) pointed out. We thought it sensible to confine it to cases where the recovery charges were largest and where substantial amounts of tax were at stake. The restrictions should apply only to those cases where the recovery charge exceeds £100,000, and then only to the excess over £100,000.
In simple terms, the effect will be to exclude virtually all unincorporated businesses from the scope of the credit restriction. We estimate that it will reduce the number of companies likely to be affected from about 30,000 to 40,000 to only 1,000. Those companies will be fully able to cope with this innovation—and I accept that it is an innovation. It should bring worthwhile savings for businesses and their advisers, while concentrating the restriction on the largest cases that really matter.
The concessions go a long way towards meeting the concern expressed by several of my hon. Friends in Committee about the administrative problems of applying the credit restriction. I hope that the amendments will be approved and welcomed on all sides of the House.

Mr. Dalyell: The Minister referred to the Green Paper. I hope that the Green Paper will be discussed well outside the Finance Bill. We are in some difficulty, because fundamental questions about charities should not be mixed up with the Finance Bill. Equally, this ought to be discussed outside the framework of any particular year's Finance Bill, and I hope that the Minister puts that point to the Leader of the House.

Amendment negatived.

Amendments made: No. 29, in page 112, line 29, leave out from beginning to 'at' in line 31 and insert—
`(1A) Subject to sub-paragraph (2) below, the amount of a charge eligible for deferment is so much of it as exceeds 5 per cent. of the opening stock value in the period of charge.
(2) Where the amount that would be eligible for deferment under sub-paragraph (1A) above exceeds £100,000 and'.

No. 30, in page 112, line 33, leave out 'charge' and insert 'excess'.

No. 31, in page 112, line 36, leave out 'charge' and insert 'excess'.—[Mr. Lawson.]

Mr. Lawson: I beg to move amendment No. 32, in page 113, line 11, at end insert—
'(4A) For the purposes of sub-paragraph (4) above there shall be left out of account—

(a) any amounts owed to the person in question which are allowable as deductions in respect of bad or doubtful debts in computing his profits or gains for the purposes of Case I of Schedule D; and
(b) any amounts of value added tax owed by him to the Commissioners of Customs and Excise or by those Commissioners to him.'
This amendment makes two fairly minor but significant changes to the definition of a business's net indebtedness, which will affect the credit restriction that we discussed in our previous debate. It deals with bad or doubtful debts, on the one hand, and the treatment of VAT, on the other. I shall be happy to answer any questions which may be put to me.

Amendment agreed to.

Mr. Lawson: I beg to move amendment No. 33, in page 113, line 12, after '(5)', insert
'Subject to sub-paragraph (6) below,'.

Mr. Deputy Speaker (Mr. Bryant God-man Irvine): With this we may discuss the following amendments:
No. 158, in page 113, line 19, leave out 'or shorter than twelve months' and insert
'than twelve months and seven days or shorter than twelve months less seven days'.
No. 190, in page 113, line 19, after 'months', insert
'except where it is shown that the relevant period of account was longer or shorter than 12 months for bona fide commercial reasons and not for the purposes of obtaining a deferment under this Schedule'.
No. 159, in page 113, line 20, leave out 'or of the preceding'.
No. 160, in page 113, line 22, after first 'or', insert 'substantial'.
No. 191, in page 113, line 25, after 'months', insert
'except that where it is shown that any such transfer or change as is mentioned under (i) or (ii) above was made for bona fide commercial reasons and not for the purposes of obtaining a deferment under this Schedule then this restriction shall not apply'.
Government amendment No. 34.
No. 183, in page 113, line 26, at end insert—
'(d) paragraph (a) above shall not apply where the period of charge is the earliest period of account which ends on or after the financial year 1979 (in the case of a company) or the year 1979–80 (in other cases)'.

Mr. Lawson: Government amendments Nos. 33 and 34 are designed to meet commitments that were given in Committee. During the Committee debate my hon. Friend the Member for Croydon, South (Sir W. Clark), whom I am glad to see, as ever, in his place, asked us to consider whether anything could be done to help businesses to obtain the benefit of the deferral provisions where they changed the length of their accounting period for bona fide commercial reasons. As was recognised in Committee, the existing rules are designed to stop businesses manipulating the length of their accounting periods in order to gain an unjustified benefit from the deferment.
However, in pressing me to look again at the matter, I quite understand that my hon. Friend was not seeking to make it any easier for businesses to undertake that form of manipulation. He suggested that some kind of test should be built into the provisions which would allow deferral where accounting periods were changed for bona fide commercial reasons. That seemed to my hon. and learned Friend the Minister of State—and I agree with him—to imply some type of motive test, with the possibility of clearance procedures and all the rest. As my hon. and learned Friend indicated, that would be a complicated, elaborate and top-heavy provision.
What we have come up with—I hope that my hon. Friend will accept it—is, in effect, a kind of half-way house provision. We have said that a motive test would not be appropriate and that, for reasons of manipulation, we cannot remove the rule altogether. However, we feel that changes in accounting periods made during 1979–80 clearly cannot have been


planned with the temporary dips scheme in mind, because that did not exist then. In the circumstances, it seems right to modify the rule for that year, and that is what the amendments seek to do.
4.45 pm
As a result, recovery charges arising for periods of account ending in 1979–80 will be deferrable in the usual way, notwithstanding that the period of account may have run for longer or shorter than the normal 12 months. Of course, the normal rules will apply to the following periods of account. I hope that my hon. Friend will accept that with this half-way house provision we have gone as far as we can to meet the point that he made.

Mr. Eric Deakins: Amendments Nos. 158, 159 and 160 stand in my name. I think that amendment No. 158 has a bearing on the Government amendment, although I do not believe that the Government amendment quite meets the point that I put to the Chancellor of the Exchequer in a letter. I look forward with interest to hearing the Minister's reply.
It is a fact of life that a number of public companies have always ended their financial year on either the last Saturday in April or the first Saturday in May, thus giving them either 52-week or 53-week financial years. This is a common practice in the food trade, where, for many companies, a Saturday stock take is the only practicable solution. One appreciates the necessity for having legislation that affords protection against any attempt to gain tax benefits by end-year manipulation, but I do not believe that it is the intention of the Chancellor or the Treasury to penalise legitimate public companies that have a long-established basis of 52-week or 53-week financial years.
Such companies would not be able to claim the benefits of schedule 7. That is wrong. I should have thought that that was not the Government's intention in introducing this part of the Bill. For some purposes—for example, for corporation tax—the Inland Revenue, by concession, treats such companies as though their period of account was, in fact, 12 months. However, that is unlikely to be a solution to this problem in regard to schedule 7, because I do not think that the Inland Revenue could deal by concession with the current position, as to do so would

clearly be against the wording of the legislation. An amendment is therefore necessary.
I turn to amendment No. 159. The Government's intention is that companies that are suffering temporary liquidity problems should be able to obtain some relief from the taxation consequences resulting from the fall in stock value. However, where part of a business has been disposed of in the preceding period for which relief is sought, in most cases the company will have suffered claw-back in that preceeding period, and will obviously have to be prevented from claiming schedule 7 relief by virtue of paragraph 1(5)(a). Where the company did not suffer clawback, because, despite the disposal of part of its businesses, its stock increased during the year, there would seem to be no reason why it should be prevented from claiming schedule 7 relief in respect of the current period.
I now turn to amendment No. 160, which applies to a number of companies in which I have worked and with which I have been associated. Many public companies are divisionalised within one trading company. Therefore, the disposal of part of their business would, under the legislation as drafted, prevent an election for deferral of stock relief claw-back where only a small part of the business had been disposed of in the current period. Surely it cannot be the intention of the Government to deny the proposed relief to the rest of the mainstream business of a company where an insubstantial part of the business has been disposed of during the current period of charge. Amendment No. 160 therefore proposes to qualify the restriction of this relief to those companies where there has been a disposal of a substantial part of the business during the current period. I think that that must have been the Government's intention.

Mr. Richard Wainwright: I wish to refer particularly to amendments Nos. 190 and 191, which stand in the names of Liberal Members. Amendment No. 190 is intended to inject some reason and sense into the question of companies which change their year end.
It will be within the experience of almost all hon. Members that many companies, for entirely bona fide reasons and


for the furtherance of their trading purposes, have occasion to change their yearend. In my own practising experience, the classic case comes with the best type of new or small business, namely, the one which is growing fast. At the beginning, it probably clutches a year-end date out of the air, or it may take the date on which the shop door was first opened. But when the business becomes sizeable, other considerations apply. There may be several reasons then for changing the year-end date, such as staffing, with the problems of a Saturday stocktake, or because of the nature of the trade and the desire not to have the year-end when the warehouses are absolutely full and stocktaking is exceptionally burdensome. For all these reasons, and many others with which I shall not burden the House, companies are in the habit of changing their year-end.
It is very odd indeed that a Government who only 15 months ago were proclaiming the gospel of not interfering with industry, and were removing bureaucratic shackles from enterprising people, should now insist that a change of year-end, for no matter how splendid a purpose, immediately disqualifies a business from relief.

Mr. Deakins: Does the hon. Gentleman agree that the position is even worse than that, with respect, because the Government are not merely trying to penalise companies that change their year-end for some reason or other; they also intend to penalise any company that does not have literally a 12-months-to-the-day accounting year.

Mr. Wainwright: So it would seem, although I had been disposed to credit the Inland Revenue with a rather more tolerant attitude than the hon. Gentleman attributes to it. He probably has the very best of reasons for taking a gloomy view. I am inclined to accept his view, which reinforces what I was trying to say.
It is very odd indeed that companies should be denied reasonable commercial elasticity by a Government who were proclaiming that very principle on their banners only very recently. It is rather sad, so early in ministerial careers that began with so much gloss and promise, to find the shades of the prison house of the Inland Revenue closing in upon them and

Ministers surrendering weakly to the worst of bureaucratic motives. That is certainly what is happening in this case.
As every hon. Member knows by now, it all arises from the extraordinarily crazy nature of the whole stock relief arrangement from its inception in 1974. As mentioned just now, sums of the order of £500 million of tax revenue a year are left to depend on one annual stocktaking. Naturally, many people dealing in commodities where stocking and destocking can be fairly rapidly achieved inflate their stocks at the year-end. They do so entirely within a law which was very ill-drawn.
I have never been able to understand why companies over a certain size, claiming stock relief over a certain amount, were not required to produce stock figures at least twice in the year, if not four times. It would be a small price to have to pay for the immense amount of tax relief that has been obtained, much of it, without a doubt, on inflated stock figures. But since that is the highly simplistic banana-republic type of law that we have to accept as being on the statute book, it is adding to the offence now to prevent companies from making a reasonable adjustment of their trading period.
The motive test has been applied in Finance Acts almost annually, in an increasing form, over the years. The Financial Secretary says that in this case it would be unduly complicated and top-heavy, but the matter seems not to have been thought out at all, and to be part of the present extraordinary fashion to deprive the citizen of equity in taxation simply for the sake of saving a few Inland Revenue clerks.
I cannot understand why it should be regarded as unduly complicated to apply a motive test to a change of year-end the reasons for which are relatively simple to establish and are matters of fact. Instead, we have this draconian clause, and the Financial Secretary has gone not halfway but only a fraction of the way towards meeting a civilised demand. Simply to defer the operation of this primitive rule for a year or so cannot be said to be meeting commercial demands halfway.
The amendment to which I am speaking would simply allow a company a


chance to argue its case that it had changed its trading period for bona fide commercial reasons. If it could establish that to the satisfaction of the Inland Revenue it would be able to defer the claw-back, just as other taxpayers can.
My other amendment refers to the restriction on deferment of clawback if the business changes hands. Here again, it is of prime importance that there should be a motive test. Clearly, there could be dealing—indeed, I have no doubt that in other ways there is dealing—in stock relief entitlements between companies, just as there has always been massive dealing in tax losses in companies. It is entirely within the law. I appreciate that there has to be some precautionary part of the legislation, but it is entirely wrong and contrary to natural justice to deny the trader an opportunity of showing that the trade has changed hands for entirely bona fide commercial reasons, as happens every day of the week.
For the reasons that I have given, I think that the Bill as it stands is defective, and I hope that we shall have something rather more forthcoming next time from the Financial Secretary.

Sir William Clark: The Minister was kind enough to say that when I spoke in Committee it was no part of my submission that there should be any manipulation for the deferment of taxation, or for the purposes of evasion, or anything like that. But, as the hon. Member for Colne Valley (Mr. Wainwright) said, the amendment that we discussed in Committee was purely to cover bona fide commercial transactions.
I am most grateful to the Minister. I realise the difficulties of the Inland Revenue in giving an exemption where bona fide reasons exist. I am also grateful that for the current year the rule will not apply. If evidence can be given to my hon. Friend during the current year showing that the clause is operating to the detriment of bona fide changes in accounting date I am sure that he will agree that we can have another look at it in the autumn.
I agree with what has just been said about stock relief. It is getting into an awful muddle. It is creating many anomalies in our tax system. It is interesting to remember that it costs the Exchequer about £1,300 million a year.

If that sum were allocated to the reduction of corporation tax generally, both rates could come down by 10 points. When we are discussing corporate tax in the Green Paper we ought to look at this.
We are most grateful to my hon. Friend for the half-way house that he has given us. In the circumstances, it is probably the best that we could expect. In saying that, I hope that this will not be the last of the concessions that the Government will make today.
The question whether there should be 52 weeks or 52 weeks and three days for stocktaking purposes gives rise to a genuine difficulty, and I should have thought that it could easily be met by a concession on the part of the Inland Revenue.

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Mr. Dalyell: I wish to sing a rather different song from that sung by the hon. Member for Colne Valley (Mr. Wainwright). Ministers certainly do not need me to defend their actions. I suspect that there is an explanation for what the hon. Gentleman said. On the surface, it might look an odd thing for a Conservative Government, or any Government, to do, but the truth is that they have to do this on not the insistence but the plea of the Inland Revenue, because of the—I shall not say fraud; I had better choose my words carefully—avoidance complications.
By this deferment—this kind of manipulation, to which Treasury Ministers have referred—a good deal of money—I shall not say a great deal of money, because I do not want to over-egg the pudding or exaggerate the case—is involved Heaven knows, both on Second Reading and in Committee upstairs I had enough to say about the black economy and tax frauds. But I put the direct question: is not the reason for taking this view to do with tax avoidance? If it is not tax avoidance, I am baffled to know why the Government have included this provision.
I agree with the hon. Member for Croydon, South (Sir W. Clark) that those who have served on a number of Finance Bill Committees are getting more and more bewildered about the stock relief complications and the vast amount of money that is now being put into stock relief. The hon. Member for Colne Valley


said that if we are to have this kind of stock relief built into the taxation system we had better have more stock checks than at present. Yet that, in turn, involves extra work, and that will not be popular in industry and commerce with the problems that they have at present.
Surely the time has come for a rethink of the whole issue of stock relief and whether it is the best way for public money to be spent for purposes that may look good on the surface but may be better served by other forms of tax relief or direct grant if money is available from the Treasury. Inevitably, I have been questioned about price tags—a subject that is all too familiar to Ministers.

Mr. Lawson: I was astonished to hear the hon. Member for Colne Valley (Mr. Wainwright) describe this clause as draconian. This draconian clause, as he described it, gives relief of about £¼ billion to companies this year. If that is his definition of a draconian clause, it is not mine.
A number of specific points have been made in this short debate. I reassure the hon. Member for Waltham Forest (Mr. Deakins) that my hon. Friend the Member for Croydon, South (Sir W. Clark), who adverted to his amendment, is absolutely right. For tax purposes, the Inland Revenue already accepts accounts which do not fall on exactly the same date each year as being 12 months accounts made up to a mean date. That means that in one year or another they may vary about that mean date. I understand that a variation of about four days is allowed. The adoption of this practice is subject to the written agreement of the taxpayer. In cases where it operates, the accounts are regarded as being for 12 months and will be treated as such for the purposes of this dips scheme. This is covered fully by the existing practice.
The other points made by the hon. Gentleman, as the hon. Member for West Lothian (Mr. Dalyell) indicated, could give rise to complex forms of tax avoidance. I have examples of how they work with company A, company B and company C, but I shall not at this stage, unless he positively insists upon it, weary the House by reading out how these things work. I must say that until I read

this I did not understand it, but I think that I do now. Anyway, complicated schemes could be devised if the clause were not drawn as it now is.

Mr. Dalyell: I do not ask the Financial Secretary to read it to the House but if he has the information available, will he send it to some of us in letter form, so we may peruse it?

Mr. Lawson: If the hon. Gentleman writes to me on a specific point, I shall certainly reply fully to him on it. I think that a general letter on forms of avoidance would not be sensible.
The points which have been made have been met halfway by covering 1979–80. We have met as far as we can the points made in Committee by my hon. Friend the Member for Croydon, South and by the hon. Member for Colne Valley. The hon. Gentleman complained about the complexity of legislation. The introduction of a motive test, clearance procedure and all this rigmarole would complicate matters even more and would be wholly unjustified in a relief of this kind.
I agree—this lay at the back of what the hon. Member for Colne Valley and others said—that the whole stock relief system is profoundly unsatisfactory. That is why we shall be putting forward proposals and having a Green Paper on corporate taxation, and possibly other consultative documents on the specific question of stock relief, with a view to putting everything on a more sensible basis. Clearly a radical solution is needed to deal with the problems created by the clawback arrangements. We are looking at this matter carefully in our review of the system. The Government are not pretending that the dips scheme is in any sense a permanent solution to the problems of clawback. Of course it is not. But we hope that it will be of considerable relief at present. Meanwhile, we are considering what can be done in the longer term to solve these problems by other and more effective means.

Amendment agreed to.

Amendment made: No. 34, in page 113, line 25, at end insert—
'(6) Sub-paragraph (5)(b) above applies only where the period of charge or the next period of account ends in or after the financial year 1980 (in the case of a company) or the year 1980–81 (in other cases).'.—[Mr. Lawson.]

Orders of the Day — Schedule 8

SUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY

Mr. John Heddle: (Lichfield and Tam-worth): I beg to move amendment No. 177, in page 116, line 6, after 'to', insert
'a building or maintenance department of'.
I am encouraged to move this amendment because of the consultative document issued by the Board of Inland Revenue dated January 1980 entitled
The Construction Industry Tax Deduction Scheme.
By way of introduction, I should like to quote paragraph 7:
The highly mobile nature of the work force and the history of past abuse suggest that some sort of arrangements for deduction of tax at source will continue to be necessary in the construction industry. Moreover, the extent to which the present rules can be relaxed must be considered against the continuing abuse of the more flexible arrangements which were introduced for companies holding 714C certificates. Nevertheless, there is no doubt that the existing rules—in particular the three-year employment rule—are in certain circumstances producing indefensibly harsh results. The present system also imposes a heavy administrative cost on the industry. Certain changes are needed and can be made without weakening the intrinsic security of the system.
The purpose of the amendment is to relieve major companies of the requirement to operate the 714 certificate scheme as contractors where they are parties to a main construction contract, but to leave the requirement for internal building or maintenance departments of such businesses—I shall give examples of those businesses—to operate the scheme where they undertake sub-contract work.
As the proposals stand, every person—"person" is the word in the legislation—commissioning construction operations who, on average over three years, spends £250,000 on such operations will be required to operate the scheme as a contractor. I pay tribute to my hon. and learned Friend the Minister of State, Treasury for persuading the Committee upstairs to increase the threshold—despite the arguments put forward by the hon. Member for Gateshead, West (Mr. Horam)—from £100,000 to the more realistic figure of £250,000. That is so whether the expenditure is carried out by way of an internal, in-house building or maintenance department—what one

might describe as a private enterprise direct labour organization—or under contract with an outside independent contractor, who in the building industry is known as the main contractor.
To include such operations, which come under a main contract, will result only in much unproductive paper work and unnecessary and expensive red tape, both for the business in question and for the Inland Revenue. That is a burden that I know my hon. and learned Friend the Minister of State would like to eliminate.
It is important to recognise that it is not a small and easily identifiable group to which the requirement will apply. It will apply to every person spending above the average three-year threshold of £250,000 a year. It will certainly include modernisation and refurbishing operations by such businesses and institutions—here I come to the definition to which I referred earlier—as banks, building societies, multiple shops, department stores, companies building or extending their factories, and hotel and restaurant chains modernising their premises.
Such businesses spending above the threshold of £250,000 are not the sort of undertakings that are likely to employ lump labour, nor are they likely to resort to using the skills of those who lurk in the black economy. On the contrary, they will engage reputable contractors, who in turn operate the tax deduction scheme where they employ subcontractors.
To require large businesses to operate the scheme when they commission construction work will contribute nothing to eliminating the lump or to reducing the black economy. It will present the businesses with an unnecessary and unwelcome administrative burden, which will be expensive and will do absolutely nothing to loosen the skein of red tape that still enmeshes some sections of our larger businesses.

Mr. Peter Viggers: Before my hon. and learned Friend the Minister of State is seduced by the charms of my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle), it is fair to say that another point of view can be put forward on the subject.
I declare an interest—it is recorded—in the building industry, which has an


ambivalent attitude towards the subcontractors scheme. The industry recognises the scheme's value. It tightens up on the collection of taxation and national insurance contributions and thereby assists reputable builders to obtain contracts that might otherwise go to those who are not so punctilious in fulfilling their taxation and national insurance requirements. On the other hand, the industry recognises that it would be impractical—indeed, impossible—to apply the scheme to every domestic contracting operation.
Therefore, the only question is where the line should be drawn. I think that the general view is that the Bill is broadly correct and that it would be correct to keep the matter under review, but that acceptance of the amendment would perhaps be to go too wide.

The Minister of State, Treasury (Mr. Peter Rees): I am in a fortunate position. In the Standing Committee we had the privilege of hearing the silver tongue of my hon. Friend the Member for Gosport (Mr. Viggers) but not that of my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle). Today we have heard deployed from the Back Benches both considerations that weigh very much with the Government. After a certain amount of consideration and a great deal deal of consultation, we have come down on the side of my hon. Friend the Member for Gosport.
As we did not have the privilege of debating the matter with my hon. Friend the Member for Lichfield and Tamworth, perhaps I should do a little more justice to his amendment. There is a definite problem as to how far we should extend the 714 certificate scheme. It undoubtedly imposes a certain administrative burden on those firms, individuals, partnerships and companies that have to operate it. We recognise that, but we feel that we are obliged, within limits, to impose on them, if only to ensure that the Exchequer receives its due share of tax from those whom they directly or indirectly employ.
After a great deal of consideration and consultation, and with a certain reluctance, we decided that we could not, largely for the reasons that my hon. Friend the Member for Gosport out-

lined, confine the scheme to what I shall call the mainstream building companies. It would put those who are not in the main stream and who operate through their own in-house departments in a favourable competitive position.
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There might well be a temptation for many large companies, which could by no stretch of the imagination be described as being in the building industry but which have occasion to command building resources to restore, repair and improve their own premises, to use in-house labour forces rather than go outside to the building industry. In other words, competition would be slightly distorted.
Therefore, we decided that we should not extend the scheme. However, after considering the points advanced in Committee, we thought that we should raise the threshold from £100,000 to £250,000 a year.
On general principles, I must advise the House, with some regret, to reject the amendment so eloquently and persuasively moved by my hon. Friend the Member for Lichfield and Tamworth. My regret is tempered, and I hope that my hon. Friend's regret will also be tempered, by certain other important technical considerations. If the House accepted the amendment, any non-mainstream company that did not choose to divisionalise itself into a building and maintenance department would be able to take itself outside the scope, so we should be building in another distortion.
I am not so much moved by the possible latent defects in the amendment. I am more moved, as I hope the whole House will be, by the general considerations. I hope that my hon. Friend will feel that justice has been done to both sides of the issue, small and difficult as it may be, and that he can honourably ask leave to withdraw the amendment.

Mr. Heddle: My hon. and learned Friend kindly referred to the silver tongue of my hon. Friend the Member for Gosport (Mr. Viggers) and to my own contribution. The golden words of my hon. and learned Friend have persuaded me to believe that he has an open mind on the matter and that he will not close the door to further discussion, perhaps this time next year. On


that assumption, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Sir Graham Page: I beg to move amendment No. 36, in page 118, leave out lines 1 to 14.
Lines 1 to 14 are paragraph 6 of the schedule. I think that it was intended by the schedule to relax to some extent the conditions under which one would be allowed to trade as a subcontractor and hold a certificate that tax did not have to be deducted from every payment made. One of the conditions is that one must have been employed in this country for three years before one can obtain such a certificate. Another is that one must have paid one's taxes.
The paragraph requires a person who has been working overseas to satisfy the Board of Inland Revenue, first, that he has been working overseas since the three-year period, and, secondly, that during the period that he was working overseas he paid all the taxes similar to income tax in this country. He must not only say that he has paid them but must produce evidence. The clause provides that such a person must satisfy the Inland Revenue, by such evidence as may be prescribed in regulations, that he has complied with his overseas tax obligations during the time spent overseas. At present, I believe that no such regulations have been issued in draft form. We do not know what the Inland Revenue has in mind. We do not know what evidence will have to be produced.
Much of the construction work done by British companies is undertaken in countries in which it would be extremely difficult to obtain a certificate, or written evidence to the effect that tax had been paid. I think, for example, of some of the Gulf countries, in which a great deal of construction work is done by British contractors. If the regulations are too severe about evidence, a worthy man may be unable to obtain the certificate that will enable him to work without having tax deducted.
To some extent, this is a probing amendment to discover what evidence would be required. However, the paragraph is too general and vague. Without it, the Board of Inland Revenue could obtain such evidence as it required. However, when it states that evidence must be

produced, one envisages that the board will require documents or firm receipts to show that the money has been paid and that tax obligations have been met. It would be no use if a taxpayer were to produce a tax receipt on earnings overseas. He would have to satisfy the board that he had satisfied all his tax obligations. I do not imagine that the authorities in, for example, Bahrain or Saudi Arabia would give an ordinary British workman a clearance certificate for his tax obligations. There will be great difficulties unless we are given a firm assurance that the board will accept a statutory declaration from the taxpayer. I believe that that is the most that he will be able to produce. I therefore commend the amendment to the House.

Mr. Peter Rees: My right hon. Friend the Member for Crosby (Sir G. Page) has returned to a point that he made in Committee, with his customary penetration and wit. I appreciate his anxiety and that of other Committee Members. He was right to emphasise that we have introduced considerable relaxations in the subcontracting scheme. This is not a tightening up, or Draconian measure. However, despite the relaxation, we must recognise that problems must be faced by the Inland Revenue if it is to ensure that a due measure of tax is exacted from those who work in the industry.
One problem has been faced by this Administration, the Labour Administration and the Administration preceding that. It has therefore been faced by parties of both political hues. People tend to drift in and out of the industry, and in and out of the country. It would be invidious if I were to single out a country that provided a reservoir of labour. My right hon. Friend the Member for Crosby instanced a country in the Middle East. That country has made a notable contribution in many spheres, but I am not certain that it has made a human contribution to the industry.

Sir Albert Costain: Does my hon. and learned Friend appreciate that many British citizens work in the Middle East because it is tax-free? If they had to get certificates showing that they had paid all their taxes the authorities would be extremely suspicious. It would be very confusing for everybody.

Mr. Rees: I accept my hon. Friend's point and I am aware of his personal interest and knowledge of such matters in the Middle East. However, I doubt whether there is a large influx or deflux of people. Nevertheless, we must take account of small numbers as well. People turn up in Britain after long periods of absence. They have no record of their tax-paying capacity or integrity. How can the Inland Revenue deal with that? We have relaxed the three-year rule to a considerable degree.
During the brief time in which I have had responsibility for these matters, I have been particularly disturbed by the number of letters that I have received from hon. Members from all parties about cases of real hardship. We were unable to deal with those cases under existing legislation. Occasionally, one may be able to temper the situation by small, administrative extra-statutory concessions. However, to go against the tenor of the legislation would be repugnant to the House and to the Government. We would expose ourselves to considerable criticism from such bodies as the Public Accounts Committee.
In addition to the relaxation that we have already provided, we feel that if a person has been abroad for three years and has no record of employment, or tax-paying employment in this country, he should provide some evidence that he has been, if not a respected citizen, at least a respected taxpayer in the various countries in which he has worked.
My right hon. Friend, with his mordant wit, instanced a country where there may not be a heavy, direct impost on those working there. No impossible or absurd burden will be placed an a taxpayer in that situation. The Inland Revenue will not require reassurance about direct and indirect taxes. Direct taxes alone will bear on such activity. My right hon. Friend said that no regulations have yet been promulgated. In the formal sense, that is true. However, draft regulations were published on 30 June for comment. In due course, they will come before the Statutory Instruments Committee, which is chaired by my distinguished right hon. Friend. There will, therefore, be ample opportunity for the House to consider and comment on them.
I hope that hon. Members will agree that the draft regulations impose an

acceptable and reasonable obligation on those who have been out of the country for a considerable time. Ultimately, there is a right of appeal to the Commissioners. That represents yet another major relaxation. To a considerable degree, we have amplified the rights of the taxpayer to challenge the administrative decisions of the Inland Revenue. An individual will have the right to go to the Commissioners in order to determine whether his case has been adjudicated fairly and reasonably. That is an additional and important safeguard.
The House will therefore have an opportunity to consider the regulations already been published in draft form, in more detail. I therefore hope that my right hon. Friend will feel that ample justice has been done to the real point that he revealed in Committee, and today.

Mr. Dalyell: I did not speak immediately after the right hon. Member for Crosby (Sir G. Page), because I was curious to hear what the Minister would say about a real problem. Some of us raised this issue not only upstairs, but in another form upstairs. We may say what we like about various countries in the Middle East, but the problem exists nearer home, namely, in the North Sea. I reported to the Minister, as I believe Mr. Linkie of East Kilbride did, that when the Scottish group of Labour Members went to East Kilbride they were told that a number of people went on to North Sea rigs—both in the British and Norwegian sectors—direct from Schipol or another airport in Holland. The Inland Revenue knows very little about such people. One gathers that that practice is growing.
It is easy to ask rhetorical questions, but it is harder to discover exactly what the answer is. People may be in the North Sea one month, and in Houston, Texas the next. To chase them round the world is easier said than done. Nevertheless, the problem remains, and it is creating considerable difficulties. One is entitled to ask the best brains in the Inland Revenue what they can do about it. To my mind there is no easy or immediate answer, but with a certain amount of care and thought perhaps this important problem could be at least half met. I wonder whether the Minister has any comment on that matter.

Sir Graham Page: I think that the hon. Member for West Lothian (Mr. Dalyell) had more in mind the avoidance of tax. What we are dealing with in this clause is an assurance that the person who applies for a certificate has paid his taxes overseas and met his obligations to another country. We are not collecting taxes for other countries in any way, or seeing that other countries have got their taxes. All we are asking is whether this man pays his taxes, and whether it is an obligation for this country or another country.
The Inland Revenue Board must be satisfied with firm statements by the taxpayer concerned if he is unable to obtain anything better. This has repercussions, not only in the North Sea, but in the Irish Republic, the United States of America and Australia, or anywhere in the world where a British contractor undertakes work and sends people out from this country. In many cases the employee receives payments tax-free, so that he will never come in contact with the equivalent of the Inland Revenue in another country. I would not think that he would want to come in contact with it, because if he asks for a certificate of clearance after two years' working he may be expected to answer a lot of questions, even though he may be quite entitled to have all his money tax-free.
I hope that my hon. and learned Friend will bear this in mind. I am sure that the increased opportunities for appeal will keep the board in check if it tries to ask for too much from a person who is in difficulties trying to produce evidence. We are relying very much on the improved administrative appeal here. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Orders of the Day — Clause 46

PROFIT SHARING SCHEMES

Sir William Clark: I beg to move amendment No. 165, in page 32, line 7, leave out '75' and insert '50'.

Mr. Deputy Speaker: With this we may take the following amendments:
No. 166, in page 32, line 22, leave out from cent 'to end of line 26.
No. 167, in page 32, line 31, at end insert
in relation to shares appropriated in any one year of assessment".
No. 168, in page 32, line 31, at end insert—
'(7) Subsection (1) above does not apply in relation to the exercise by or on behalf of a participant of the rights arising under a rights issue, as defined in section 55(5) above, if subject to agreement of the Board the trustees arrange—

(a) for the value of such rights to be taxed forthwith as income of the participant in the same manner as the receipt of a sum of money under section 59 below;
(b) for the locked-in value of the shares which gave rise to such rights to be reduced by the value of such rights as has been taxed forthwith; and
(c) for any shares acquired on behalf of the participant with such rights to be transferred to his name forthwith notwithstanding the provisions of section 54(1)(c) above.'.

Sir William Clarke: I do not think that this amendment need take very long, as it was fully debated upstairs. Despite the fact that the profit-sharing schemes which this Government have introduced are very welcome, and despite the fact that many people in the country are grateful for them, the Inland Revenue has made rather a meal of all this.
Let us, for example, take the rate of taxation. If one is in a profit-sharing scheme, for the first two years one cannot sell the shares. In the next two years, if the shares are sold, one pays 100 per cent. tax on them. If one sells after another year the rate of tax is 75 per cent. It then decreases to 50 per cent. and 25 per cent. in subsequent years. That is an unnecessary and excessive complication. The effect of my amendment is to provide that shares should not be sold for the first two years, but if they were sold within the following five years, the sales would be taxed at a rate of 50 per cent. This would be administratively sensible and it would save the Inland Revenue a considerable amount of time and taxpayers' money.
On the question of rights issues that are given to profit-sharing schemes, one could have the position whereby an employee who participates in the scheme takes up and pays for a rights issue. But alas, as I read the clause, it means that those shares that he got from his rights issue are still subject to the same regulations as the original shares given under


a profit-sharing scheme. I hope that the Government will look at this. I do not think that my amendments will cost the Inland Revenue anything, but they will lead to administrative saving.

Mr. Richard Wainwright: I do not think that the House will be surprised that I, as a Liberal Member, wish to make one or two comments about these admirable amendments to what was originally and admirable scheme. Many employees are benefiting from such schemes. If the schemes could be simplified and better publicised by the Government, and if sanctions for the schemes could be more rapidly forthcoming from the Inland Revenue, a great many more people would benefit. In fact, we might even succeed in getting as many people into the schemes as the Treasury already assumes, for the purposes of costing reliefs. In fact, for the purposes of costing the reliefs proposed in Committee, the Treasury blithely assumed that between 3 million and 4 million employees were involved. That is very much to be desired, but it is a wholly unrealistic estimate.
Not only do the amendments benefit employees financially; they have the great merit of simplifying what is at present an inordinately complex scale of gradations of tax relief. It really is a bit much the way Treasury Ministers use the argument of increasing the simplicity of tax law and dispensing with Inland Revenue clerks when it suits them to do so. But when they feel a need to cling on to the last penny of tax from employee shareholders, they have no hesitation about imposing four different levels of tax. The Government, who have done away disastrously with the lower rate band of income tax on the ground that it was a band too many, apparently have no shame in producing a scheme for employee shareholders with four different reduced rates of tax.
I should like to report some of the comments of leading companies that have installed schemes under the provisions for employee share ownership. I shall quote from British Caledonian Airways Limited, which was quick to take advantage of the new share ownership provisions of 1978. In writing to the Chancellor of the Exchequer with commendable promptitude on 5 May—very soon after the Finance Bill was published—the chair-

man of British Caledonian, inter alia, said:
It is essential that an incentive is simple to explain and to understand if it is to be effective. However, I am sure that you are aware that these schemes are already complex and demanding to administer. Unfortuately, some of the measures that you announced in the budget will make the already difficult task of operating the scheme even harder.
He went on:
The tapering relief in its existing three stages is already difficult to explain. A reduction in the proposed four stages is, therefore, greatly desirable.
I shall read out some quotes from other well-known companies which have adopted the scheme. One of them says:
We find the entire framework of regulations tiresome and largely beyond the comprehension of our non-financial participants.
Another says:
I am bound to say I agree with you that, apart from any other considerations, four rates of tax do seem particularly fussy and, I would have thought, cumbrous for the Inland Revenue to administer.
Another well known company says:
It would be much simpler to have only one, or a maximum two, tax bands covering a period of say, five years, at the end of which time the shares could be released free of tax.
The final comment that I wish to quote is
The major difficulty in introducing this kind of scheme is the communication with employees and I do not think this has received sufficient attention by the Government. Leaving aside the administrative complications that even this more beneficial scheme still causes, the difficulty of communicating anything which is as complicated as this legislation … should not be underestimated.
The amendments, which were so clearly outlined by the hon. Member for Croydon, South (Sir. W. Clark), would simplify the scheme and add to the financial incentives to employees. On those two grounds I hope that the Government will concede his case.

Mr. Kenneth Carlisle: I welcome the Government's proposals for increased profit sharing, and support the desire of my hon. Friend the Member for Croydon, South (Sir W. Clark) for simplicity. We are aiming to get more and more businesses engaged in profit-sharing. The more simple the schemes, the more attractive they will be, not only to the firms, but also to those who work in them. However, I believe


that the schemes could be simpler still if, after the retention period, which is now four years, the shares were released free of tax. I should also like to see the retention period shortened to three years.
My hon. Friend's amendments are one step, but I hope that the Government will bear in mind the scope for profit sharing and what it can mean in terms of good employee relations. I hope that they will see the Bill and these amendments as a first step in what for a Conservative Government must be a sensible and serious pilgrimage.

Mr. Lawson: My hon. Friend the Member for Croydon, South (Sir W. Clark) moved his amendment succinctly and ably. The first amendment sets out to simplify the concession by having two rates of tax instead of four. My hon. Friend advanced a strong argument. However, the present system is not inordinately complicated, as the hon. Member for Colne Valley (Mr. Wainwright) suggested. The figures are 75, 50, 25 per cent., and nil, which does not seem too difficult. The hon. Gentleman underestimates the intelligence of the average working man.

Mr. Richard Wainright: On that showing, can the hon. Gentleman explain why in the Budget his Government abolished one reduced rate of income tax for the great majority of taxpayers?

Mr. Lawson: We debated that matter fully in Committee and yesterday. The reason was not that it was difficult to conceive or comprehend the figure of 25 per cent.
My hon. Friend's proposal is simpler, but at the end of the day disposals in year 7 would attract 50 per cent. instead of 25 per cent. tax. It would also be tougher on an individual member of one of these schemes. It is six of one and half a dozen of the other, but on a fine balance I believe that it is sensible to stick where we have stuck. We shall not be dogmatic, and no doubt we can look at the matter again in future years.
My hon. Friend is correct in thinking that working rights issues into such a scheme is complicated. We discussed the issue yesterday on new clause 29, and he will recall what I said then. We have to find a better way of dealing with rights issues. The system should be simplified,

provided that the tax position is protected. Officials from the Inland Revenue recently met members of the Wider Share Ownership Council to discuss the problems and consider proposals to remedy the difficulties. As I indicated yesterday, it is a complex area. We shall need wider consultation.
5.45 pm
It would be premature to accept the amendment at present. We are giving the matter sympathetic consideration, with a view to proposing a remedy for the difficulties encountered by trustees in time for next year's Finance Bill.

Mr. Dalyell: Is it really the Financial Secretary's considered opinion that it is sensible to stick where we have stuck? If so, that is "suck it and see" again.

Sir William Clark: In view of the general review of capital taxation, and my hon. Friend's assurance that the matter will be considered between now and the next Budget, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Lawson: I beg to move amendment No. 106, in page 33, line 2, at end insert—
'(9A) In paragraph 6 of that Schedule (conditions as to shares)—

(a) the word "either" shall be omitted; and
(b) at the end of paragraph (b) there shall be inserted "or
(c) shares in a company which is under the control of a company (other than a company which is or would if resident in the United Kingdom be a close company within the meaning of section 282 of the Taxes Act) whose shares are quoted on a recognised stock exchange."
(9B) At the end of paragraph 8 of that Schedule (majority of shares of same class to be held by persons unconnected with the scheme) there shall be inserted the words" and
(c) in a case where the shares fall within sub-paragraph (c) and do not fall within sub-paragraph (a) of paragraph 6 above, companies which have control of the company whose shares are in question or of which that company is an associated company within the meaning of section 302 of the Taxes Act.".'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendments Nos. 110, 111, 112, 113 and 114.

Mr. Lawson: These amendments involve invaluable technical improvements


to the profit-sharing schemes and savings-related share option schemes. I shall be happy to answer any questions.

Mr. Roger Moate: The amendments extend the scope of share option schemes to be applied to subsidiary companies of quoted companies at home or abroad. The amendments are significant, but I wish that they had gone further.
My hon. Friends have praised the steps that the Government have taken to extend profit sharing. I endorse those sentiments. My hon. Friend the Member for Lincoln (Mr. Carlisle) described the proposals as a step on a pilgrimage. There is still a long way to go before profit-sharing becomes a significant feature of our lives, My hon. Friend is well qualified to speak on the subject. He has produced a book called "Share in the profits", which has an added title to try to win over the Tribune group—
A popular future for capitalism".
I am disappointed that the amendments do not extend the scope for profit sharing and wider share ownership schemes to subsidiary companies in general. I recognise that until now a general stance has been adopted against companies that were unquoted and those that were subsidiary companies. There are dangers in having such profit-sharing schemes for subsidiary companies. Particularly if they are unquoted, there is the problem of establishing a proper valuation for the shares. There are doubts about whether all transactions between parent and subsidiary companies are truly arm's length transactions. By extending the scope of these schemes to subsidaries of quoted companies the government have conceded that those problems can be overcome. Even the relationship between a subsidiary and a quoted parent still presents recognisable difficulties. Why can we not go a step further and extend the schemes to all subsidiary companies, subject to whatever safeguards may be deemed necessary by the Government? If we are to make wider share ownership a reality for a large number of people it is important to allow such schemes to be applied to subsidary companies.
It is reasonable to assume that a subsidiary company, being a smaller part of the whole, is likely to involve a group of

individuals to a greater extent. Their contribution to a subsidiary is likely to be that much greater, and we are anxious to encourage such participation.
International companies are increasingly establishing subsidiaries in this country. If we want those subsidiaries to have a large number of United Kingdom shareholders, namely, employees in this country, we must allow the subsidiaries, which may be subsidiaries of unquoted companies abroad, to be able to offer shares to their employees.
I can think of substantial, private, unquoted companies operating in the United Kingdom that are subsidiaries of an unquoted company and wish to introduce share option schemes for their employees. I am sure that everyone would like to see such companies introduce share ownership schemes, but they cannot do so at present. That is regretable.
I appreciate that there are technical difficulties. My hon. Friend the Financial Secretary has gone half way, but I wish that he had gone further. There will be disappointment that he has not done so. I know that he shares the general desire to extend share ownership schemes as far as possible and I ask him to look at the question of subsidiary companies, with a view to coming back next year—I sometimes wish that another place could consider Finance Bills, so that amendments could be introduced there—to extend these vital schemes to the vast number of subsidiary companies that are at present excluded.

Mr. Lawson: The Bill and the Government amendments under discussion go a long way to increase the number of companies that may introduce employee share schemes and, therefore, to increase the number of employees who may benefit from such schemes. We called for that when we were in Opposition and we have carried it out. In particular, we have extended the scheme to unquoted subsidiaries of quoted companies.
My hon. Friend the Member for Faversham (Mr. Moate) asked why we did not go further and extend the scheme to unquoted subsidiaries of unquoted companies. He is not so naive as not to have been able to guess the reasons. An unquoted parent company could manipulate


the value of an unquoted subsidiary's shares at will and make nonsense of the scheme. It would open the door to the most flagrant abuse.
There is some risk in what we have done already in providing that schemes may be introduced by unquoted subsidiaries of quoted companies, but the restraints on the behaviour of a quoted company are much greater than those on an unquoted company. We have gone a long way and to go further would leave the scheme wide open to abuse.

Amendment agreed to.

Mr. Lawson: I beg to move amendment No. 39, in page 33, line 16, leave out
'13(1) of that Schedule'
and insert
'13 of that Schedule—

(a) in sub-paragraph (1)'.

Mr. Deputy Speaker: With this we may take Government amendment No. 40.

Mr. Lawson: The purpose of the amendments is to make clear by statute that on the release date the trustees can transfer shares to the name of the beneficial owners.

Amendment agreed to.

Amendment made:

No. 40, in page 33, line 20, at end insert
'; and
(b) in sub-paragraph (2) (trust instrument must prohibit trustees from disposing of shares after end of period of retention except in certain circumstances) after the word "retention" there shall be inserted the words "and before the release date".'.—[Mr. Lawson.]

Orders of the Day — Clause 47

SAVINGS-RELATED SHARE OPTION SCHEMES

Amendments made:

No. 41, in page 33, line 35, at end insert (i)'.

No. 42, in page 33, line 39, at end insert
'; and
(ii) section 19(3) of the Capital Gains Tax Act 1979 (assets deemed to be acquired at market value) shall not apply in calculating the consideration for the acquisition of the shares'.—[Mr. Lawson.]

Orders of the Day — Schedule 10

SAVINGS-RELATED SHARE OPTION SCHEMES

Amendments made:

No. 43, in page 120, line 37, at end insert
'but where rights obtained under a scheme before the withdrawal of approval from the scheme under this paragraph are exercised after the withdrawal, section 47(1)(b) above shall apply in respect of the exercise as if the scheme were still approved.'.

No. 44, in page 121, line 18, leave out '(2)—[Mr. Lawson.]

Mr. Richard Wainwright: I beg to move amendment No. 45, in page 121, line 18, leave out from 'Act' to end of line 20.
I shall be brief, because the Government have gone a long way to meet the points that were made in Committee. The main purpose of the amendment, in deleting from the schedule
which has been approved by the Board for the purposes of this Schedule
is to point out that until the Government issued a welcome press release a few days ago hon. Members had little idea of what the board would or would not approve and what the criteria would be.
That was causing great concern to employees who had been subscribing to SAYE schemes in recent years, fully within the terms embodied in the Bill, and who looked like being denied the fruits of their savings. That would have been a gross inequity and a great discouragement to SAYE schemes.
I give an unreserved welcome to the recent announcement by the Inland Revenue that the Government would table amendments today, and I welcome those amendments. However, the schemes could suffer if the SAYE savings being accumulated towards the purchase of shares were allowed to bear a low rate of interest. That would be an underhand way of keeping schemes in check, but there seems to be no safeguard against that possibility. I am glad to notice that in the scheme that has been announced as approvable the rates of interest are to be reasonable, both to the taxpayer and to the Treasury. After hearing what the Financial Secretary has to say, I shall be happy to ask leave to withdraw the amendment.

Mr. Lawson: I thank the hon. Member for his kind words, particularly about the Inland Revenue press release of 11 July. I am glad that it satisfied him and I hope that in the light of that he will ask leave to withdraw his amendment.

Mr. Richard Wainwright: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made:

No. 46, in page 121, line 44, leave out 'or'.

No. 47, in page 121, line 45, after '1978' insert:
'or retirement on reaching pensionable age within the meaning of Schedule 20 to the Social Security Act 1975 or any other age at which he is bound to retire in accordance with the terms of his contract of employment, then'.

No. 48, in page 122, line 6, leave out from 'that' to end of line 9 and insert:
'where a person who has obtained rights under it continues to hold the office or employment by virtue of which he is eligible to participate in the scheme after the date on which he reaches pensionable age within the meaning of Schedule 20 to the Social Security Act 1975, he may exercise the rights within six months of that date.'.—[Mr. Lawson.]

Mr. Lawson: I beg to move amendment No. 108, in page 122, line 11, leave out 'the company issuing the' and insert
'a company whose shares are'.

Mr. Deputy Speaker: With this we may take the following amendments:
No. 49, in page 122, line 11, leave out issuing' and insert 'liable to issue'.
Government amendments No. 116 and 109.
No. 52, in page 123, line 13, leave out 'body issuing the shares' and insert
company liable to issue the shares'.

Mr. Lawson: The effect of the Government amendments is to make clear that the provisions of paragraphs 10 and 14 of the schedule relate to the company whose shares are the scheme's shares, even if no shares have, in fact, been issued. The Government amendments meet the point of the amendments in the name of the hon. Member for Colne Valley (Mr. Wainwright).

Amendment agreed to.

Amendments made: No. 115, in page 122, line 23, leave out 'and' and insert—

'(aa) if under section 206 of the Companies Act 1948 or section 197 of the Companies Act (Northern Ireland) 1960 (power to compromise with creditors and members) the court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of a company whose shares are scheme shares or its amalgamation with any other company or companies, rights obtained under the share option scheme to acquire shares in the company may be exercised within six months of the court sanctioning the compromise or arrangement;'.

No. 116, in page 122, line 25, leave out 'the company' and insert
'a company whose shares are scheme shares'.

No. 117, in page 122, line 25, leave out 'Companies Act 1948' and insert
'said Act of 1948 or section 200 of the said Act of 1960'.

No. 118, in page 122, line 30, at end insert
'and
(c) if a company whose shares are scheme shares passes a resolution for voluntary winding up, rights obtained under the scheme to acquire shares in the company may be exercised within six months of the passing of the resolution.'.

No. 51, in page 122, line 45, after 'amounts', insert
(not exceeding £50 a month)'.

No. 109, in page 123, line 12, leave out from 'of' to end of line 13 and insert
'which the scheme shares form part'.

No. 110, in page 123, line 26, leave out 'either'.

No. 111, in page 123, line 29, at end insert
'or
(c) shares in a company which is under the control of a company (other than a company which is or would if resident in the United Kingdom be a close company within the meaning of section 282 of the Taxes Act) whose shares are quoted on a recognised stock exchange.'.

No. 112, in page 124, line 1, after 'the', insert 'scheme'.

No. 113, in page 124, line 8, leave out 'and'.

No. 114, page 124, line 11, at end insert
'and
(c) in a case where the shares fall within sub-paragraph (c) and do not fall within subparagraph (a) of paragraph 16 above, companies which have control of the company whose shares are in question or of which that company is an associated company.'.—[Mr. Lawson.]

6 pm.

Mr. Lawson: I beg to move amendment No. 119, in page 125, line 7 at end insert—

'Transitional arrangements

24.—(1) This paragraph shall apply in any case where the Board are satisfied that—

(a) a person has entered into a certified contractual savings scheme within the meaning of section 415 of the Taxes Act before the day appointed for the coming into force of this Schedule; and
(b) he has obtained rights under a scheme established before that day to acquire shares in a company of which he is an employee or director (or a company of which such a company has control) using repayments made under the certified contractual savings scheme.

(2) Subject to sub-paragraph (3) below, where this paragraph applies repayments and interest paid under the certified contractual savings scheme shall be treated as repayments and interest paid under a scheme approved by the Board for the purposes of this Schedule under paragraph 5(b) above and accordingly may be used for the purchase of shares under a savings-related share option scheme approved under this Schedule.

(3) The repayments and interest to which sub-paragraph (2) above applies shall not exceed the repayments and interest to which the participant would have been entitled if the terms of the scheme had corresponded to those of a scheme approved by the Board for the purposes of this Schedule under paragraph 5(b) above; and for the purposes of this paragraph the amount of repayments under the certified contractual savings scheme shall be determined as mentioned in paragraph 6 above.'.

The amendment is designed to allow participants in existing save-as-you-earn linked share option schemes to bring their existing SAYE contracts, whether with the Department of National Savings or with a building society, into new approved share option schemes provided that, as participants, they are eligible under the 1980 rules, and to use the proceeds to exercise options granted under the new schemes with the prospect of tax relief. This fulfils an undertaking given by my hon. and learned Friend in Committee upstairs. I commend it to the House.

Amendment agreed to.

Sir Graham Page: I beg to move amendment No. 1, in page 125, line 13 leave out 'think necessary' and insert 'may reasonably require'.
I refer my hon. Friend to the powerful arguments that I used on a similar amendment earlier.

Mr. Lawson: I was not present at the

time, but I recall reading the powerful arguments—they read beautifully—put by my right hon. Friend. However, for the reasons given in Committee upstairs, I do not think that I can accept the amendment. In Committee we accepted my right hon. Friend's suggestion that the information requested should be limited to that which the addressee has or can reasonably obtain. We feel that that should be a sufficient safeguard. I hope that with my assurance that the board will not make requests under this paragraph unless it has good reason for doing so my right hon. Friend will not see lit to press his amendment to a Division.

Amendment negatived.

Orders of the Day — Clause 48

CARS AVAILABLE FOR PRIVATE USE

Amendment made: No. 53, in page 34 line 26, leave out from 'year' to end of line 32 and insert
'a person is taxable under section 64 of this Act in respect of two or more cars which are made available concurrently, there shall be increased by half the cash equivalent derived from Table A, B or C in respect of each of those cars other than the one which in the period for which they are concurrently available is used to the greatest extent for the employee's business travel.—[Mr. Lawson].

Orders of the Day — Clause 50

BENEFICIAL LOAN ARRANGEMENTS

Mr. Lawson: I beg to move amendment No. 197, in page 35, line 25 at end insert—
'(2) Where the amount of interest paid on a loan for the year of assessment in which it is made is not less than interest at the official rate applying for that year for the purposes of section 66 of the said Act of 1976 and the loan is made—

(a) for a fixed and unvariable period; and
(b) at a fixed and unvariable rate of interest,
subsection (1) of that section shall not apply to the loan in any subsequent year by reason only of an increase in the official rate since the year in which the loan was made.
(3) Where a loan was made at any time before 6 April 1978—

(a) for a fixed and unvariable period; and
(b) at a fixed and unvariable rate of interest,


subsection (1) of the said section 66 shall not apply to the loan if it is shown that the rate of interest is not less than such rate as could have been expected to apply to a loan on the same terms (other than as to the rate of interest) made at that time between persons not connected with each other (within the meaning of section 533 of the Taxes Act) dealing at arm's length.'.

Mr. Deputy Speaker: With this it will be convenient to take the following amendments:
No. 54, in page 35, line 25, at end insert—
'(1A) Where a loan otherwise within section 66 (1) of the Finance Act 1976 was excluded therefrom for the year in which the loan was made because subsection (1)(b) was satisfied, then, if that loan was made for a fixed and unvariable period of time at affixed and unvariable rate of interest, no charge shall arise under the said section 66 and Schedule E for a later year if the said subsection (1)(b) ceases to be satisfied merely because the official rate of interest as defined in the said section 66 exceeds that prevailing for the year in which the loan was originally made.'.
No. 55, in page 35, line 25, at end insert—
'(1B) Where a loan was made before subsection (1) of section 66 of the Finance Act 1976 came into effect and it would otherwise be within that sub-section then if:—

(a) the loan was made for a fixed and unvariable period of time at a fixed and unvariable rate of interest, and
(b) it is shown that that rate of interest is not less than the rate that would have applied to a loan between independent persons not connected within the meaning of section 533 of the Taxes Act dealing at arm's length made at the time of the loan first above mentioned was made and containing the same terms, except the rate of interest, as that loan,
the said sub-section shall no longer apply in respect of that loan'.

Mr. Lawson: It be for the convenience of the House if I reply to the debate on these amendments.

Mr. Allan Stewart: I thank my hon. Friend for moving Government amendment No. 197. My name is attached to amendments Nos. 54, and 55. These are technical points about the effect of section 66 of the Finance Act 1976. It may be for the convenience of the House if I assure my hon. Friend that Government amendment No. 197 meets the points in my two amendments. The House will doubtless also be grateful to the Minister

because his amendment absolves me from the need to make a speech. I should like the Minister to pass on my thanks to the civil servants involved who met the point very quickly. The matter was brought to my attention and the amendments were tabled only recently.

Mr. Lawson: I am grateful to my hon. Friend, who shrewdly spotted a defect in the Bill. I, too, pay tribute to the officials who worked hard on the matter. We found a way of meeting the point which we felt did not have some of the problems posed by my hon. Friend's amendments. I am glad that my hon. Friend accepts that the Government amendment meets his point.

Amendment agreed to.

Orders of the Day — Clause 52

MAINTENANCE FUNDS FOR HISTORIC BUILDINGS

Mr. Peter Rees: I beg to move mendment No. 56, in page 36, leave out lines 34 and 35 and insert
'then, unless subsection (6) below applies, income tax shall be charged under this section in respect of the settlement.'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 57.

Mr. Rees: The amendments are designed to extend a measure of income tax relief where funds are appointed out of one maintenance fund into another maintenance fund. This is in response to a point made in Committee upstairs, where it was recognised that it was illogical to extend capital transfer tax and capital gains tax relief in that situation, but to deny a certain measure of income tax and stamp duty relief. We dealt with the stamp duty points at an earlier stage. Amendments Nos. 56 and 57 deal with the income tax point.

Amendment agreed to.

Amendment made: No. 57, in page 37, line 27, at end insert—
'(6) Tax shall not be chargeable under this section in respect of a settlement on an occasion when the whole of the property comprised in it is transferred tax-free into another settlement; but on the first occasion on which tax becomes chargeable under this section in


respect of a settlement ("the current settlement") comprising property which was previously comprised in another settlement or settlements and has become comprised in the current settlement as a result of, or of a series of, tax-free transfers, the relevant period for the purposes of subsection (2) above shall, as respects that property, be treated as having begun—

(a) on the last occasion on which tax became chargeable under this section in respect of the other settlement or any of the other settlements; or
(b) if there has been no such occaison, when the other settlement or the first of the other settlements took effect.
(7) For the purposes of subsection (6) above property is transferred tax-free from one settlement into another if it ceases to be comprised in the first-mentioned settlement and becomese comprised in the other settlement in circumstances such that by virtue of section 88(4)(d) below there is no charge to capital transfer tax by reference to its value.'.—[Mr. Peter Rees.]

Orders of the Day — Clause 59

AUTHORISED UNIT TRUSTS

Amendment made: No 61, in clause 59, page 41, line 3, leave out from beginning to first 'the' in line 7.—[Mr. Peter Rees.]

Orders of the Day — Clause 63

EXCLUSION OF FIRST-YEAR ALLOWANCES FOR CERTAIN LEASED ASSETS

Sir William Clark: I beg to move amendment No. 170, in page 43, line 1, at beginning insert: 'Subject to subsection (3A) below'.

Mr. Deputy Speaker: With this it will be convenient to take the following amendments:
No. 171, in page 43, line 25, at end insert:
'(3A) A television receiver or video system is used for a qualifying purpose when it is leased to a lessee who uses it for domestic purposes and in this subsection "video system" means any electronic equipment which is designed to transmit visual programmes or information through a television set.'.
No. 172, in clause 71, page 53, line 20, leave out subsection (5).
Government amendments Nos. 133 and 134.
Amendment No. 173, in schedule 1, page 131, line 37, leave out Part II.
Government amendments Nos. 135 to 138.

Sir William Clark: I am grateful to my hon. and learned Friend for taking the point made in Committee upstairs with regard to 100 per cent. capital allowances for television rentals. The television rental industry, in which I have no vested interest, is a major part of, and helps, our manufacturing industry. Of all the sets in use under rental terms, about 93 per cent. are made in the United Kingdom and only 7 per cent. abroad. Where sets are bought by the general public, 40 per cent. are foreign. In those circumstances, it is incumbent upon the Government not to do anything that might damage the television industry.
The Government have changed their mind with regard to the 100 per cent. first-year allowance. In television rentals the phasing down has been put off for two years, and for Prestel it has been put off for four years. If it is logical—I agree that it is—to put off the phasing down of the 100 per cent. first-year allowance for television sets, it is surely logical for video and Teletext.
I cannot understand why the Revenue differentiates between the equipment when it comes from the same industry. I hope that the Government will re-examine the position to see whether we can include video and Teletext. This is an important industry. We must give it all possible support. All that the industry asks is that if an assembly line is developed for video or Teletext, the products should be entitled to the 100 per cent. first-year allowance.

Mr. Nicholas Baker: I wish to refer to a type of leasing which is ignored not only in the clause but in the amendment. The purpose of the clause is to restrict allowances unless the machinery or plant is leased to a genuine trader. I understand the purpose of excluding the foreign-to-foreign leases which, rightly, are subject to considerable criticism.
The clause excludes allowances for the export leasing of goods manufactured in the United Kingdom which could have serious implications for a form of trading which companies are developing and about which I have corresponded with the Minister of State. I refer to leases backed by the Export Credits Guarantee


Department. I do not intend to describe in detail the advantages that companies manufacturing in the United Kingdom have when practising that form of trading. It is not to be confused with other types of foreign leasing. Indeed, it does not have any of the objectionable features that foreign-to-foreign leasing has.
The value of contracts structured in that way is not large. The ECGD says that it has underwritten between £30 million and £40 million worth of such business in the last two years. The potential for export and bona fide export trade is substantial. Even though the Civil Service has not come across this form of trading much in the past, I urge the Minister of State not to overlook it now but to reconsider it for the benefit of the export trade.

Mr. Peter Rees: My hon. Friend the Member for Croydon, South (Sir W. Clark) referred to a case which we discussed upstairs. We recognise how important it is not to damage the television industry. Originally we were sensitive to the issue because we allowed a transitional period for the phasing out of additional allowances. In deference to the important arguments advanced by my hon. Friend and other hon. Members in Committee, and representations from outside, we have extended the transitional relief by a further two years in the case of television sets and by a further four years in the case of Prestel and Teletext.
My hon. Friend pressed me to say why we should exclude video equipment and Teletext. These are fine matters. The conception of the initial allowances was for the re-equipment of British industry. Television sets, video equipment and Teletext do not fall into that category. We are anxious to allow the industry sufficient time to adjust to the altered situation which would be created by the phasing-out of the allowances. Not a great deal of investment has been made in the production of video equipment so far and we did not feel that there was a strong case for allowing a longer period of adjustment. That is why such equipment is not dealt with on the same favourable basis.
My hon. Friend the Member for Dorset, North (Mr. Baker) raised a matter which is more properly related

to amendment No. 147, which is not selected for debate. However, the matter is important and we discussed it in Committee. This Government, like previous Administrations, are anxious to ensure that export industries are not prejudiced. I am not persuaded that capital allowance is the proper way to deal with the problem. If we were too lavish and unthinking we should be in breach of some of our obligations under European Community.
6.15 pm
Initial allowances were introduced to encourage British industry to re-equip and produce. They were not designed to encourage exporting. The scheme has been extended—I do not say abused—by a series of anomalies into a range of areas for which they were not intended. As a result we were compelled to rethink the scope of initial allowances. We were compelled to consider the question of individuals who were not directly involved in a true commercial sense in the provision of equipment and to decide how far they should be entitled to set capital allowances against the equipment that they bought for hiring. These matters are not central to the conception of the initial allowance. If there are to be benefits or reliefs for exports they should not come through capital allowances.
I hope that my hon. Friend the Member for Croydon, South will agree that we have done ample justice to the case that he so ably deployed in Committee and which he has continued to champion inside and outside the House, by tabling amendments Nos. 133 to 138. I commend the amendments to the House because they extend by a considerable degree—by two years in the case of television equipment and by four years in the case of Teletext and Prestel—the transitional period before the phasing out of the initial allowances, which was the original intention of the provisions.

Sir William Clark: I am grateful for that reply. The House is grateful for the concession in the form of the 100 per cent. first-year allowance. However, I do not accept my hon. and learned Friend's argument about the video production. We are talking of new equipment. If an assembly line is put down what happens will be determined when the equipment is leased. I hope that my hon. and learned Friend will not close his mind.
I thank my hon. and learned Friend for the courteous way in which he received representatives from the television industry. They were delighted that they were given some concession by the Government.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 120, in page 43, line 9, leave out from 'for' to 'or' in line 16 and insert 'short-term leasing'.—[Mr. Peter Rees.]

Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 121, 122, 123, 124 and amendment No. 174, in clause 72, page 53, line 37, at end insert
'except that the provision of plant and machinery incidental to the provision of a service shall not be considered to constitute leasing or hi ring for those provisions'.

Mr. Nicholas Winterton: It is not often that one can come to the House and thank the Government for doing something about a particular industry. On this occasion I am doing just that.
I declare straight away my position as parliamentary adviser to the Contractors Plant Association. I have been involved with the industry for many years. The plant hire industry was gravely concerned when the Bill was published and made strong representations to the Government about the effect that its provisions would have upon the industry. As drafted, the Bill would equate hiring with leasing, but there is a great difference between hiring and leasing. As a result the proposed legislation on leasing would have removed, or reduced, the 100 per cent. first year capital allowance to firms which hired or leased plant or equipment to non-qualifying bodies for periods normally exceeding 30 days or exceeding 90 days in any one year to the same client. By non-qualifying companies I mean non taxpaying bodies such as local authorities and certain overseas companies.
Had the provisions in clauses 60 to 67 become the law of the land, they would, when applied to plant hire, at the very least have required extremely complicated additional records to be kept for tax purposes. Different rates of hire would need to be charged, depending on the tax

status of the client or on the circumstances.
The Contractors Plant Association and other bodies related to the construction industry, which is under severe pressure at this time, have made strong representations to the Government.
The CPA in particular considered that if the proposals had become law they would, at worst, have saddled the plant hire industry with a near-impossible situation, whereby it would be required to differentiate between various items of plant, various kinds of client and various periods of hire. The consequences would also have been painful for certain firms over the next year or two in relation to cash flow and the budgets already prepared on the basis of the 100 per cent. first-year capital allowance.
I pay tribute to my hon. and learned Friend the Minister of State, who responded quickly and readily to the representations which I and other hon. Members made to him and which the industry, through its various commercial organisations, not least the CPA, made direct to the Treasury. The response has been such that the Government amendments meet virtually everything that the industry requires, and the industry is grateful for that.
It is clear that the Government have taken on board the unique position of the plant hire industry. That position is not matched in any other country in the EEC and these Government amendments will resolve the problems facing the industry. Therefore, on behalf of the industry I thank the Minister and the Treasury officials for so readily and kindly meeting the justified criticisms that were brought to their attention by the industry.

Sir William Clark: The amendment in my name is coupled with the amendments under discussion. I wish to make one point, which is that in Committee I raised the matter of the provision of machinery used in factories and offices for the purposes of hygiene, safety and health. That type of machinery supplies linen and certain types of work wear. I asked my hon. and learned Friend whether the phasing down of the 100 per cent. capital allowance applied to that kind of machinery. My hon. and learned Friend will recollect that he said that the matter had not been brought to his attention before but that he would look into it.
Such machines, although they may be leased to a company are really of minor importance. What matters is the service provided by the machines, such as the replacement of towels and work wear. In those circumstances I should have thought that the phasing down of the 100 per cent. capital allowance should not apply to that kind of machine. I hope that my hon. and learned Friend will say something about that.

Mr. Anthony Grant: The Association of British Launderers and Cleaners has its headquarters in my constituency and is particularly concerned about this matter. The association was delighted when my hon. and learned Friend the Minister of State said that he was glad that the point had been drawn to his attention. He said in Committee that he had undertaken to introduce on Report an amendment to deal with short-term hire and that he hoped to be able to do ample justice to the important hygienic point that had been brought to his attention by my hon. Friend the Member for Croydon, South (Sir W. Clark).
On that basis the association had hoped to hear something to its advantage and is extremely disappointed that the Treasury does not seem to have taken the point on board. I stress that the issue is important for two reasons. The character of the laundry industry has changed considerably over recent years. It has become much more sophisticated and technological. Therefore, the matter is of increasing importance to it. As it becomes increasingly necessary for the National Health Service to finance itself by better use of its own resources, launderers undertake about 10 per cent. of laundry work in the NHS. The industry confidently expects that it will be able to undertake a greater proportion of that work and for that reason this matter has become more important to the industry and to the NHS, and I hope that my hon. and learned Friend will consider the point favourably.
I appear in sackcloth and ashes because eight years ago when a similar point came up on behalf of the then Government I had to resist the powerful case made by the launderers. I have reread the debates of that time and I find that what I said was wholly unconvincing.

Mr. Peter Rees: We have had a short and extremely graceful debate. It was graceful for the way in which my hon. Friends made their contributions. I was particularly touched and grateful to my hon. Friend the Member for Macclesfield (Mr. Winterton) for recognising what we have endeavoured to do to correct what was, perhaps, an over-stringent initial approach to the problem of short-term hire. I know that that particularly affected the plant hire industry. I also know that my hon. Friend is much concerned with the issue both in his capacity as a Member of the House and as a consultant to the industry. He brings considerable expertise to bear on the problem and we are grateful to him for drawing our attention to the provisions which were drawn too tightly, as we now recognise.
It is in response to the points made in Committee, particularly by my hon. Friend for Croydon, South (Sir W. Clark) and the subsequent representations made by my hon. Friend the Member for Macclesfield, that we hope that we have struck the right balance. We are reassured to hear my hon. Friend's observations on this particular point.
I turn to the more specialised points made by my hon. Friend the Member for Croydon, South and my hon. Friend the Member for Harrow, Central (Mr. Grant). My hon. Friend the Member for Harrow, Central says that he appears in sackcloth and ashes. If I may say so, they are sackcloth and ashes of a particularly elegant kind. We welcome him to our discussion of this somewhat arcane subject.
My hon. Friend the Member for Croydon, South did draw the matter to my atention for the first time. We believed that we had reviewed every possible industry and area of commercial endeavour that might be affected. It shows that one's consultations can be entirely comprehensive. We have looked at this matter again and have consulted the industries which my hon. Friends eloquently championed. The towels are the most expensive element of the expenditure, and under the provisions as we have now relaxed them they will benefit from the initial allowance. However, there is a second category of expenditure, which consists of towel holders, soap dispensers and other such items which are perhaps


supplied to non-qualifying lessees. I admit that it is most unlikely that they will qualify for 100 per cent. first year allowances.
6.30 pm
However, we understood from our consultations with the laundry interests concerned that the expenditure is fairly marginal in relation to the main expenditure, which is the provision of linen garments, and so on. So much is that the case that the association with which we have primarily had consultation told us that it might consider whether in future such items might be given away to its members' customers rather than hired to them. That suggested to us that this issue was not one of great moment to them.
I hope, therefore, that on reconsideration we shall be found to have done justice to this matter. I hope that my hon. Friend will recognise that the greater part of the expenditure—that on towels, special clothing, and so on—will still be covered by the initial allowance. I hope that my hon. Friend the Member for Croydon, South will feel able not to press ahead with amendment No. 174.

Amendment agreed to.

Amendment made: No. 121, in page 43, line 17, leave out
'in the manner mentioned in paragraph (b) above' and insert 'for short-term leasing'.—[Mr. Peter Rees.]

Mr. John Browne: I beg to move amendment No. 107, in page 43, line 22, at end insert
'or
(e) it is leased to a lessee other than a local authority and is a machine constructed or adapted to supply to persons either

(i) goods, or
(ii) services within the meaning of section 6(2)(b) of the Finance Act 1977: and the use of the machine requires the insertion into a slot or other aperture in the machine of one or more coins or tokens.'.
I accept the general aims of clause 63, but as presently drafted it places an undue burden upon suppliers of fruit machines, juke boxes, video machines and pool tables. I personally have no interest in this industry, but the manufacturers of such machines include members of the British Amusement Catering Trades Association, the members of which employ about 20,000 people.
These companies supply the machines that I have described to a market in which the location of each machine in terms of the owner changes every two years or less. My hon. Friends the Members for Macclesfield (Mr. Winterton), Croydon, South (Sir W. Clark) and Harrow, Central (Mr. Grant) have explained the general arguments as they apply to other industries. However, I draw attention to a particular case because of the rapid change of ownership of the machines concerned. Therefore, I believe that the discrimination in the clause between qualifying and non-qualifying companies places an undue strain in terms of overhead costs on the suppliers of the machines, first, in identifying the type of client, secondly, in recording every movement of the machines in the first four years after their initial sale, and, thirdly, in arranging for the immediate repayment of the capital allowance should such a machine pass into non-qualifying hands within the four-year period.
That overhead is undue in terms of the waste arising from paper work and time, particularly management time. It is therefore against our basic Conservative philosophy of reducing such a burden. I ask my hon. and learned Friend the Minister of State to overcome the problem by accepting the amendment.

Mr. Peter Rees: I understand that my hon. Friend the Member for Winchester (Mr. Browne) tabled his amendment on the day that certain Government amendments were tabled. The Government amendments were designed to liberalise the terms of short-term leasing. On reflection, I hope that they will cover at least some of the points raised by my hon. Friend.
We did not apply ourselves particularly to the range of products that my hon. Friend has in mind, not through any value judgment on the ground that we do not feel that they make any contribution to the life of our society—because they probably do—but because, on the whole, we suspected that they were the kind of products that were leased to a person who would not in his own right have been entitled to that range of capital allowances.
The underlying concept of the first-year allowances was to encourage British industry to equip. Irrespective of


whether my hon. Friend accepts that concept, he will understand that in logic, that being the basis, there was no case for extending the allowances to the range of products that he had in mind. Since then I have had occasion to consider in more detail the point that he has raised. I suspect that a considerable number of members of BACTA may well be able to take advantage, under the new terms governing short-term leasing, of the new allowances granted on that basis.
It may be that we did not liberalise the provision with those products in mind, but it is an ill wind that blows nobody any good and the change may carry a few advantages for the members of the organisation that my hon. Friend has in mind.
I cannot advise the House to accept my hon. Friend's amendment, and I therefore hope that he will obtain comfort from the fact that some of the people for whom he is expressing concern will gain advantage from what we have done. If there are any technical points that my hon. Friend would like to raise after reconsidering the matter I shall be delighted to try to respond to him in correspondence. I hope that he will not feel obliged to press the amendment to a Division.

Mr. John Browne: I thank my hon. and learned Friend for his reply. If these arrangements do not prove satisfactory, will he be prepared to allow the suppliers the same transitional allowance as it at present granted to television rental companies? I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 122, in page 43, line 22, at end insert—
'(2A) In subsection (2)(b) and (c) above "short-term leasing" means leasing the machinery or plant in such a manner—
(a) that—
(i) the number of consecutive days for which it is leased to the same person will normally be less than thirty; and
(ii) the total number of days for which it is leased to the same person in any period of twelve months will normally be less than ninety; or
(b) that—
(i) the number of consecutive days for which it is leased to the same person will not normally exceed three hundred and sixty-five; and

(ii) the aggregate of the periods for which it is leased in the requisite period to lessees not faling within subsection (2)(a) above will not exceed two years.'.

No. 123, in page 43, line 23, leave out '(2)(b)' and insert '(2A)'.

No. 124, in page 43, line 25, at end insert:
'and where any machinery or plant is leased as one of a number of items which form part of a pool of items of the same or a similar description and are not separately identifiable all the items in the pool may be treated as used for short-term leasing within the meaning of that subsection if substantially the whole of the items in the pool are so used.'.—[Mr. Peter Rees.]

Sir Graham Page: I beg to move amendment No. 62, in page 43, line 41, at end insert 'and to containers'.

Mr. Deputy Speaker (Mr. Bernard Weatherill): With this we may also take Government amendment No. 125.

Sir Graham Page: In discussing the previous amendments we have heard about the nature of the clause. It excludes the 100 per cent. first year allowance of expenditure on the provision of machinery or plant for leasing unless the machinery or plant will be used for a qualifying purpose. The qualifying purpose is defined in subsection (4) in connection with a ship. It says that the ship is used for a qualifying purpose
when it is let on charter in the course of a trade … operating ships.
The containers used on ships are now so much a part of ships that they should be treated the same as ships. There is a considerable trade at present in the leasing of containers. We discussed this matter in Committee. My amendment is a simple one. The Government amendment wraps the issue up very neatly and, having explained my intention, I am most happy to accept it and to thank my hon. and learned Friend for putting it on the Order Paper after our discussion in Committee.

Mr. Peter Rees: I am grateful to my right hon. Friend the Member for Crosby (Sir G. Page) for his remarks. To him must go the credit for having focused the attention of the Committee upstairs on the problems of containers—the importance of which to the British economy and world trade cannot be overstressed. If his keen eye is satisfied with the


extended amendment No. 125, I hope that the House will be equally satisfied. I commend it to the House.

Mr. John Garrett: I am pleased that the Government have extended relief to container leasing. As the Minister knows, we asked in Committee that that should be done. We debated at some length the subject of container leasing, but we received a dusty answer. In and around my constituency 600 jobs have been lost in container manufacturing and allied trades since the Bill was introduced. I am pleased that this measure of assistance, for which we and others in Committee asked, has been granted.

Sir Graham Page: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 125, in page 43, line 41, at end insert—
'(5A) Without prejudice to subsection (2) above, a transport container is also used for a qualifying purpose at any time when it is leased in the course of a trade which is carried on by a person who is resident in the United Kingdom or who carries on the trade there if—

(a) the trade consists of or includes the operation of ships or aircraft and the container is at other times used by that person in connection with the operation of ships or aircraft; or
(b) the container is leased under a succession of leases to different persons who, or most of whom, are not connected with each other.'.—[Mr. Peter Rees.]

Mr. Peter Rees: I beg to move amendment No. 126, in page 44, line 22, at end insert—
'(8A) This section does not preclude the making of a first-year allowance in respect of expenditure on the provision of machinery or plant if it is fixed to a building or land of which the person who incurs the expenditure is the lessor and the circumstances are such that a transfer of his interest in the building or land would operate to transfer his interest in the machinery or plant; and so much of the proviso to section 48(4) of the said Act of 1971 as relates to section 74(3) of the said Act of 1968 (restriction of relief for leased asset not used for trade) shall not apply to any allowance in respect of such expenditure.'.

Mr. Deputy Speaker: With this we may take amendment No. 65, in clause 72, page 54, line 2, at end insert—
'(7) The foregoing provisions of this Chapter shall not apply to machinery and plant attached to land and forming part of a lease of land.'.

Mr. Rees: I hope that the amendment covers the point raised by my hon. Friend the Member for Renfrewshire, East (Mr. Stewart) in amendment No. 65. It is in response to a point made in Committee. The amendment will exclude from the scope of the main leasing provisions machinery or plant that forms part of a let building. The main principles were amply debated in Committee. On that brief basis, I commend the amendment to the House.

Mr. Allan Stewart: I am grateful to my hon. and learned Friend for bringing forward Government amendment No. 126. It meets the point that I made in Committee. I give notice that I shall not move amendment No. 65.

Amendment agreed to.

Orders of the Day — Clause 66

INFORMATION

Mr. Peter Rees: I beg to move amendment No. 127, in page 48, line 39, after 'and' insert
', subject to subsection (2A) below,'.

Mr. Deputy Speaker: With this we may tale the following:
Government amendments Nos. 128 to 131.
Amendment No. 64 in schedule 12 page 130, line 19, leave out 'of that time' and insert
'of his becoming aware of that fact'.
Government amendment No. 132.

Mr. Rees: Amendment No. 127 and the subsequent five amendments deal with the reporting requirements of those who might be involved in leasing operations. They are designed specifically in response to points made in Committee, especially those by my right hon. Friend the Member for Crosby (Sir G. Page), in whose name stands amendment No. 64. I hope that the House and my right hon. Friend will feel that, through these amendments, we have done ample justice to the arguments adduced in Committee.

Sir Graham Page: Amendment No. 64 is well included within the Government amendments, which go much further and, if I may use the phrase, wrap up the


matter nicely. I am grateful to my hon. and learned Friend.

Amendment agreed to.

Amendments made:

No. 128, in page 48, line 39, after 'shall', insert '(a)'.

No. 129, in page 48, line 42, leave out 'shall' and insert '(b)'.

No. 130, in page 48, line 44, at end insert—
'(2A) If at the end of the three months mentioned in paragraph (a) of subsection (2) above the person concerned does not know and cannot reasonably be expected to know that any item of machinery or plant in respect of which he is required to give a notice under that subsection has been used otherwise than for a qualifying purpose he shall in respect of that item give the notice within thirty days of his coming to know that it has been so used.'.—[Mr. Peter Rees.]

Sir Graham Page: I beg to move amendment No. 63, in page 49, line 9, after 'may', insert 'reasonably'.
I repeat the extremely powerful arguments that I used previously on similar amendments. On this occasion, I have no doubt that they will be accepted.

Mr. Peter Rees: The arguments of my right hon. Friend are nearly always powerful. I hope that he will recognise that the arguments that I adduced against them in Committee were equally powerful. Rather than weary the House by repeating them, I propose to stand on them. I hope that he will recognise the close attention that the Government have paid to his arguments in this area, because it extends beyond the area of leasing. We have done our best to meet the legitimate points made by him on a variety of cases. I hope that he will recognise that the powerful counter arguments adduced in Committee have some merit. On that basis, I hope that he will be persuaded to withdraw the amendment.

Amendment negatived.

Orders of the Day — Clause 71

COMMENCEMENT AND TRANSITIONAL PROVISION

Amendment made: No. 133, in page 53, line 22, leave out '1982' and insert '1986'.—[Mr. Peter Rees.]

Orders of the Day — Schedule 12

TRANSITIONAL RESTRICTION OF FIRST YEAR ALLOWANCES

Amendments made:

No. 131, in page 130, line 19, leave out
'within three months of that time'.

No. 132, in page 130, line 21, at end insert:
', and, subject to sub-paragraph (1A) below, and such notice shall—

(a) be given within three months after the end of the chargeable period or its basis period in which the machinery or plant is first used as aforesaid; and
(b) relate to all the items of machinery or plant (if more than one) in respect of which that person is required to give a notice under this sub-paragraph in respect of that period.
(1A) If at the end of the three months mentioned in paragraph (a) of sub-paragraph (1) above the person concerned does not know and cannot reasonably be expected to know that any item of machinery or plant in respect of which he is required to give a notice under that sub-paragraph has been used as mentioned in paragraph 1(1)(b) above he shall in respect of that item give the notice within thirty days of his coming to know that it has been so used.'.

No. 134, in page 131, line 35, leave out '1982' and insert '1986'.

No. 135, in page 131, line 39, leave out '1st June 1982' and insert:
'the end of the transitional period.
(2) In this Part of this Schedule "the transitional period" means—
(a) in relation to expenditure on the provision of a television set other than a viewdata received, the period of four years beginning with 1st June 1980;
(b) in relation to expenditure on the provision of a view-data receiver, the period of six years beginning with that date.
(3) In this Part of this Schedule "a view-data receiver" means a television set constructed for displaying information received by means of a telephone land-line connection in response to a request for specified information communicated by those means to a computer data bank; and a television set shall not be regarded as a view-data receiver by reason only of being constructed for receiving teletext transmissions, that is to say, transmissions intended for general reception and consisting of a succession of visual displays (with or without accompanying sound) each capable of being selected and held for separate viewing or other use.'.

No. 136, in page 131, line 44, leave out paragraphs (a) and (b) and insert—

'(a) if the person who incurs the expenditure has the set delivered to him in the penultimate year of the transitional period, be of


an amount equal to 75 per cent. of the expenditure;
(b) if that person has the set delivered to him in the last year of that period, be of an amount equal to 50 per cent, of the expenditure.'.

No. 137, in page 132, line 12, after 'set', insert
'which the person who incurs the expenditure has delivered to him in the last two years of the transitional period'.

No. 138, in page 132, line 20, after 'set', insert
'which the person who incurs the expenditure has delievered to him in the last two years of the transitional period and'.—[Mr. Peter Rees.]

Orders of the Day — Clause 78

GENERAL RELIEF FOR GIFTS

Sir Graham Page: I beg to move amendment No. 69, in page 58, line 21, after 'individual', insert
'or a trustee or trustees'.

Mr. Deputy Speaker: With this we may take amendment No. 70, in page 58, line 23, after 'individual', insert
'or a trustee or trustees'.

Sir Graham Page: The amendment deals with capital gains tax. Clause 78 provides a new roll-over relief for any disposal after 5 April 1980 by one individual to another individual. The individual must be resident in the United Kingdom. The roll-over applies if it is by way of gift or
otherwise than under a bargain at arm's length".
The word "individual" is causing some concern to those outside the House who are endeavouring to interpret the clause. The use of the word "individual" may exclude a similar gift between trustees or when one party is a trustee.
There are many cases in which property is held by a trustee who has no interest, except eventually to hand the property to the beneficiary. There may be cases of joint holders, such as husband and wife, who hold as trustees although beneficially entitled. It would be a misfortune if the roll-over relief were not allowed to those holding in that position.

The amendment provides no means of tax avoidance or cheating in this matter. It is simply applying the word "individual" to a similar animal, a trustee.

Mr. Peter Rees: I shall respond briefly to the point made by my right hon. Friend the Member for Crosby (Sir G. Page), which he made also in Committee. The Government accept, as did the previous Government, the principle that property held in trust should be subject to no greater and no lesser a burden of tax than properly held beneficially by an individual or individuals. I accept the principle underlying my right hon. Friend's amendment. As I said in Committee, anything that touches on trust property is a matter of some complexity. As the Government have undertaken to conduct a full review of capital taxation, I hope that the House will agree that the matter should be considered at greater leisure. I do not want to brush aside my right hon. Friend's point on the basis that it is subject to certain technical defects and does not cover every contingency, but there is a wide range of circumstances that must be considered.
I assure my right hon. Friend that we hope to return to this matter in later years, but in the context of a wider review, rather than on a hasty review of the point that was made in Committee, I hope that my right hon. Friend will be reassured by my categoric statement that we believe that trust property should be subject to no greater and no less a burden of tax than that on property owned by individuals. I hope that on that basis he will feel able to ask leave to withdraw his amendment.

Sir Graham Page: I thank my hon. and learned Friend for his reply. Although the clause may not, technically, cover the cases that I have mentioned, I hope that an extra-statutory rule will apply and that the principle that my hon. and learned Friend has enunciated will be put into practice by the Inland Revenue, even if, technically, it goes against the wording of the clause. In that hope, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Orders of the Day — Schedule 15

REDUCTION OF CAPITAL TRANSFER TAX: TRANSITIONAL PROVISIONS

Amendments made:

No. 74, in page 135, line 9, leave out from 'of' to 'before' in line 10 and insert
Schedule 16 to this Act by reference to a death which occurred, or a settlement which ceased to exist, '.

No. 75, in page 135, line 14, at end insert
'or when the settlement ceased to exist.'.—[Mr. Peter Rees.]

Orders of the Day — Clause 87

MAINTENANCE FUNDS: REQUIREMENTS AND ELIGIBLE PROPERTY

Amendments made:

No. 77, in page 64, line 36, after 'below', insert
'for the maintenance, repair or preservation of property comprised in the settlement'.

No. 78, in page 64, line 43, leave out 'such time' and insert 'time in that period'.

No. 79, in page 65, line 2, leave out 'other time' and insert
'time after the end of that period'.

No. 80, in page 65, line 3, at end insert—
'(2A) After subsection (3) there shall be inserted—
(3A) Paragraph (aI and (b) of subsection (3) above do not apply to property which—
(a) was previously comprised in another settlement; and
(b) ceased to be comprised in that settlement and became comprised in the current settlement in circumstances such that by virtue of section 88(4)(d) of the Finance Act 1980 there was no charge to tax by reference to its value;
and in relation to any such property paragraph (c) of that subsection shall apply with the omission of the words 'at any time after the end of that period '.".'.—[Mr. Peter Rees.]

Orders of the Day — Clause 88

MAINTENANCE FUNDS: CHARGE OF TAX

Amendments made:

No. 81, in page 66, line 12, at end insert
'; and where tax is chargeable on any occasion in accordance with that subsection the pro

visions of section 73 of the Finance Act 1976 and Schedule 10 to that Act (relief for business property) shall apply as if the trustees had made a transfer of value and the amount on which tax is chargeable were the value transferred by that transfer.'.

No. 82, in page 67, line 24, leave out
'the person on whom the property devolves'
and insert
'or to which a person becomes beneficially entitled on the occasion on which the tax is chargeable, the person on whom it devolves or who becomes beneficially entitled to it'.—[Mr. Peter Rees.]

Orders of the Day — Schedule 16

MAINTENANCE FUNDS: CHARGE OF TAX

Amendments made:

No. 83, in page 136, line 21, leave out 'became' and insert 'was'.

No. 84, in page 136, line 28, leave out 'became' and insert was'.

No. 85, in page 136, line 28, at end insert—
'(4) If at any time in the last thirty years the property ceased to be comprised in a settlement ("the original settlement") and became comprised in another settlement other than the current settlement in circumstances such as are referred to in paragraph 3(1)(b) below, the Board shall not under sub-paragraph (2)(b) or (3) above select the person who was the settlor in relation to the original settlement but may direct that paragraph 1 above shall not apply and that the rate or rates at which tax is chargeable on the amount in question shall be those referred to in sub-paragraph (2)(a) or (b) of paragraph 3 below, taking the reference to the settlement referred to in sub-paragraph (1)(a) of that paragraph as a reference to the original settlement.'.—[Mr. Peter Rees.]

Orders of the Day — Clause 92

PROPER LIFERENT AND FEE

Amendment made: No. 145, in page 69, line 27, after 'kind', insert
'(other than a reversionary interest)'.—[Mr. Peter Rees.]

Orders of the Day — Clause 93

DELIVERY OF ACCOUNTS

Mr. Peter Rees: I beg to move amendment No. 153, in page 70, line 30, leave out from Where' to end of line 34 and insert
'in the case of the estate of a deceased person no grant of representation or confirmation has been obtained in the United


Kingdom before the expiration of the period of twelve months from the end of the month in which the death occurred—

(a) every person in whom any of the property forming part of the estate vests'.

Mr. Deputy Speaker: With this we may take the following amendments:

No. 86, in page 70, line 33, at end insert
'or because a person who has intermeddled in this estate has not obtained such a grant or confirmation'.

Government amendment No. 154.

No. 87, in page 71, line 1, after 'Board', insert
'within a reasonable time he becomes or ought reasonably to have become aware of the above circumstances'.

Government amendment No. 155.

Mr. Rees: This amendment deals with the drafting defect in clause 93(4) which extends the circumstances in which a capital transfer tax account has been submitted. The defect was drawn to our attention in Committee by the keen and assiduous eye of my right hon. Friend the Member for Crosby (Sir G. Page), and is the subject of his amendment No. 86. I hope, however, that in the circumstances he will feel that ample justice has been done to the point by Government amendment No. 153.

Sir Graham Page: The Government amendments amply cover those that I tabled, and therefore I shall not pursue my amendments.

Amendment agreed to.

Amendments made:

No. 154, in page 70, line 41, leave out
'within paragraph (a) above in respect of'
and insert
'beneficially entitled to an interest in possession in'.

No. 155, in page 71, line 5, at end insert—
'(4A) In sub-paragraph (4) of the said paragraph 2 after the word "if" there shall be inserted ", in the case of an account to be delivered by a person falling within sub-paragraph (2A) above, a person falling within that sub-paragraph has satisfied the Board that an account will in due course be delivered by the personal representatives or if, in that or any other case,".
(4B) After sub-paragraph (5)(a) of the said paragraph 2 there shall be inserted—
"(aa) in the case of an account to be delivered by a person falling within subparagraph (2A) above, before the expiration

of the period of three months from the time when he first has reason to believe that he is required to deliver an account under that sub-paragraph; and".'.

No. 156, in page 71, line 14, leave out subsection (6) and insert—
'(6) The provisions of subsection (4), (4A) and (4B) above shall come into force on the coming into force of the first regulations made under paragraph (a) of subsection (1) above; and if regulations under that paragraph come into force on different dates in respect of diferent parts of the United Kingdom those provisions shall come into force in each part on the coming into force of the first regulations that come into force in respect of that part.'.

No. 157, in page 71, line 16, leave out 'or an order'.—[Mr. Peter Rees.]

Orders of the Day — Clause 98

DEALERS IN UNLISTED SECURITIES

Amendments made:

No. 94, in page 74, line 37, after '1958', insert
'or the Prevention of Fraud (Investments) Act (Northern Ireland) 1940'.

No. 95, in page 74, line 38, leave out 'that Act' and insert
'either of those Acts, or
(c) is a member of a body which is a recognised association of dealers in securities for the purposes of either of those Acts, or
(d) is a Stock Exchange broker, that is to say a member of The Stock Exchange who is recognised by the Council thereof as carrying on the business of a broker and carries on that business in the United Kingdom.'.—[Mr. Peter Rees.]

Orders of the Day — Clause 102

ADVANCE PAYMENTS OF TAX

Sir Graham Page: I beg to move amendment No. 96, in page 76, line 5, leave out subsection (4).
This clause deals with advance payments of tax in respect of the oil taxation provisions. This amendment is by way of a protest at a breach of principle. It provides for taxation by statutory instrument. While it provides that the statutory instrument, if it increases the percentage figure for the tax, shall not be made unless a draft has been laid before the House and approved by resolution of the House, it is the wrong way to deal with such an important and massive tax.
Even worse, if the percentage is to be reduced, it can be done by statutory instrument, which, as I read the clause, does not even have to be laid before the House. Therefore, even though it may provide for a reduction in taxation, it is a matter that the House should not sanction. The House is conscious of its power in matters of taxation, whether it is increasing or reducing the burden on the taxpayer. We should take great care not to slip into the Finance Bill, in connection with a form of taxation that may not affect many people, a subsection that breaches the privilege of the House. Therefore, I propose the deletion of that subsection from the clause, and the Bill.

Mr. Peter Rees: My right hon. Friend is a stickler for constitutional proprieties, and rightly so. I hope that I shall never be allowed to fall short of the high standards that he sets for the administration of this country. However, I take issue with him on this point. We debated the matter at considerable length in Committee because of the constitution and because of the implications of principle. Subsection (4) does not provide for an increase of tax. It provides for an increase in the amount of tax that may be made by way of advance payment. As my right hon. Friend will recognise, if there is an increase in the rate of advance payments for petroleum revenue tax it will ultimately be caught up by the payment in due course of the main tranche of petroleum revenue tax. Therefore, it will increase the amount that an oil extractor has to pay in advance, but it will not affect the overall tax paid on the profits from the extraction of oil in our waters.
An increase can be made only by way of statutory instrument, subject to the affirmative resolution procedure, so the matter can readily be brought before the House for debate. As my right hon. Friend and the House will recognise, there is a precedent which goes a little further. I have in mind the regulator provisions, which allow the Administration of the day, subject to safeguards, to increase the amount of indirect taxation. This provision falls short of that, but I hope that the House, arguing from that precedent, and accepting the safeguards that are built in, will recognise that this is

proper, that there is a sound precedent for it, and will be able to accept it.
We owe a debt of gratitude to my right hon. Friend for having brought the matter into the open again, but we should never be party to any unprincipled, unconstrained increase in taxation by the Executive. That is certainly not the Government's intention, and we have hedged the provision around with a great number of safeguards, which I hope at the end of the day will make it acceptable not only to my right hon. Friend but to the House as a whole.

7 pm

Sir Graham Page: I appreciate that my argument is not so strong when there is the precedent of the regulator. I was hoping that we should not set more precedents by this subsection. I wish my hon. and learned Friend could have given me another answer, but I shall not press the amendment.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Orders of the Day — Clause 113

MISCELLANEOUS AMENDMENTS

Mr. Lawson: I beg to move amendment No. 139, in page 87, line 16, leave out '(b)'.

Mr. Deputy Speaker: With this it will be convenient to take the following amendments:
Government amendment No. 140.
Amendment No. 100, in page 87, line 20, at end insert
'but this amendment shall not apply to a transaction which this Board is satisfied is not made with the primary intention of tax avoidance and is one in which all parties to it are companies within the same group'.
Government amendment No. 141.

Mr. Lawson: These amendments fulfil an undertaking that I gave in Committee, and I hope they will commend themselves to the House.

Sir Graham Page: The purpose of amendment No. 100 was to endeavour to ensure that the clause did not catch perfectly innocent and genuine transactions. I was hoping that my hon. Friend might have said whether my amendments


were in any way included in the Government amendments and whether my points had been met. I cannot recognise in the Government amendments any evidence that the point has been met, but I may not have read them sufficiently carefully.

Mr. Lawson: My right hon. Friend is absolutely correct. The Government amendments are an attempt in a different way—and a way that I feel is more appropriate—to meet the point that he very rightly made.
My right hon. Friend's amendment is very similar to amendment No. 334, which was tabled in Committee by my hon. Friend for Renfrewshire, East (Mr. Stewart). In replying to the debate on the whole subject—which is basically how to prevent avoidance without capturing bona fide transactions in this limited but important area—I said that I would see whether the provision in subsection (2), as it then was, could be refined so as to let out at least some bona fide transactions. I made the point then that it would be most unlikely, if not impossible that we could catch the avoidance transactions without at the same time catching some bona fide transactions. I hoped that we could keep those to a minimum.
The amendments to clause 113(2), as it now is, are the result of the undertaking that I gave. They do not—as my right hon. Friend's amendment would—import a motive test. Instead, they would allow the exempt slice to be given where the transactions between connected persons before disposal outside did not involve the fragmentation of an interest in land.
I hope that my right hon. Friend will agree that the purpose behind his amendment has been met, even though it has been met in a different way from the way that he proposed.

Amendment agreed to.

Amendments made: No. 140, in page 87, line 18, after 'value)' insert—
'(a) in paragraph (b)'.

No. 141, in page 87, line 20, at end insert—
'(b) in paragraph (c) there shall be inserted at the end the words "being either a part disposal or a disposal of an interest resulting from a part disposal made after the date and within the period mentioned in paragraph (a) above by a person who at the time of the part disposal was connected for the purposes of

that Act with the person to whom the part disposal was made".'.

No. 142, in page 87, line 36, leave out subsection (5) and insert—
'(5) In paragraph 5 of Schedule 4 to that Act (development excluded from material development)—
(a) in sub-paragraph (3)(a) for the words "where any development extends to two or more buildings within the same curtilage, those buildings" there shall be substituted the words "two or more buildings within the same curtilage";
(b) after sub-paragraph (3) there shall be inserted
(4) The rebuilding referred to in paragraph (b) of sub-paragraph (1) above may be on a different site within the same curtilage." '.—[Mr. Lawson.]

Orders of the Day — Schedule 18

DEMERGERS

Mr. Denzil Davies: I beg to move amendment No. 102, in page 147, line 38, after 'must', insert:
'for a period of five years'.

Mr. Deputy Speaker: With this it will be convenient to take the following amendments:

No. 103, in page 148, line 35, after 'not' insert:
'be made otherwise than for bona fide commercial reasons or'.

No. 105, in page 151, line 1, leave out 'five' and insert 'ten'.

Mr. Davies: You have indicated, Mr. Deputy Speaker, that with amendment No. 102 we may debate amendments Nos. 103 and 105. Amendments Nos. 103 and 105 are different. I do not make any criticism of the grouping, but I shall deal with them separately, because they are not entirely on the same point as amendment No. 102.
Amendment No. 102 is an amendment to what is now known as the demerger schedule, which was debated fully in Committee. When I raised the points in Committee the Minister of State said that he would bear them in mind, although he did not make any commitment. The amendment seeks to insert the words
for a period of five years
during which, after a distribution, a company must still be a trading company.
As I understand the schedule, it applies to trading companies, and we ascertained in Committee that immediately after a distribution a company can cease to be a trading company. It can be a trading company for a day, and after that it can become something else, or become dormant. It is our contention that that might open up a loophole in the legislation, and we do not want to see that. For that reason, we have put in the amendment the words
for a period of five years
during which time a company must continue to be a trading company. That is a reasonable safeguard. There might still be certain circumstances in which people would try to avoid tax, but five years would be a reasonable safeguard.
Amendment No. 103 is different. It relates to paragraph 7(2), and it seeks to strengthen the sub-paragraph by saying that not only must a scheme of arrangement not have as its main purpose the avoidance of tax but that it must not
be made otherwise than for bona fide commercial reasons".
The amendment picks up the drafting later on in the schedule, in paragraph 12, which is entirely satisfactory. No doubt the Minister of State will tell me why the drafting in paragraph 12 of the schedule is different from that in paragraph 7(2). My intention is to make the two similar and to provide a belt and braces in relation to the possibility of tax avoidance, because there will be the possibility of tax avoidance under the schedule. Although we do not oppose the schedule, no doubt attempts will be made to use it for tax avoidance purposes. The amendments seek to prevent certain loopholes from appearing.
I turn now to amendment No. 105. As I understand the schedule, if distributions are made within five years there is a tax charge, but if they are made after five years there is no tax charge. It is our contention that five years is too short a time. It is very difficult to place any particular time limit and I accept entirely that this is a matter of judgment, but I should have thought that five years was too short a period. It is perfectly possible to tie up assets for five years in the hope of getting a tax benefit at the end of the day. That is why we have tabled the amendment to increase the period

from five years to 10 years as an added safeguard.
The three amendments are designed to strengthen the tax avoidance provisions of the schedule.

Mr. Peter Rees: We had a wide-ranging debate in Committee on the conceptions underlying the demerger provisions. As I explained to the Committee, and as I hope I may explain again to the House, it is crucial to strike a right balance here to ensure, as the right hon. Member for Llanelli (Mr. Davies) stated, that these provisions do not become a charter for tax avoidance. But equally we must ensure that they have some practical effect and that they are drawn sufficiently liberally to encourage people to demerge. The criticism that I venture to raise against the right hon. Gentleman's amendments is that it goes a little too far on the tax avoidance side.
I understand the right hon. Gentleman's point on amendment No. 102, but I am not quite certain what vice he wishes to prevent. The right hon. Gentleman, with his Calvanist approach to problems, detects sin where I, being more relaxed, do not. If he could persuade me that there was sin or vice here, I should be the first to accede to his amendment. However, I do not think that he can. I do not find it objectionable that a company may become dormant. That, I think, is about the only option open to it under these fairly tightly drawn provisions. The right hon. Gentleman said that it was objectionable that a company should become dormant, but he did not develop the argument why that should be so.
I do not claim that these demerger provisions will be the last word by this or any other Administration is this area of considerable technicality and complexity. We shall certainly watch this area as it develops over the years to ensure that we have struck the right balance and that people, for legitimate reasons, are enabled to demerge and are encouraged to take advantage of these provisions. Equally, we shall watch to ensure that these provisions do not encourage tax avoidance in this area.
I advise the House not to accept the amendment. I hope that the right hon. Gentleman will accept that if we find a measure of tax avoidance in this area


we shall bring in a measure to prevent it, if not precisely on these lines, at least on comparable lines.
The right hon. Gentleman then spoke to amendment No. 103, which seeks to build in a further test in the context of paragraph 7. Again, I think that he would be the first to accept—indeed, he asked me to reconcile some rather fine drafting provisions—that the demerger provisions are studded with conditions and tests designed to ensure that the distributions and transactions that take place are undertaken for bona fide commercial reasons, and not for the avoidance of tax. I am hesitant to build in too many provisions of that kind. Otherwise, as I said earlier, they will stultify the provisions and discourage bona fide operators from taking real advantage of them.
The right hon. Gentleman, referring to amendment No. 105, suggested that the asset should remain locked inside the corporate structure which emerged as a result of demerging transactions for 10 years rather than for five years. As I said in Committee upstairs, it is a matter of fine judgment as to what is the right period to impose in this instance. We considered these provisions very carefully not only before we tabled them in Committee, but before Report. We felt, and still feel, that five years is adequate. The right hon. Gentleman, who, as I said, has a Calvanist approach to these matters, suggests 10 years. I am reluctant to recommend 10 years. Again, I feel that that would build in undue rigidity. However, I undertake that if we find that we have been too liberal and flexible in these provisions and they become a charter for tax avoidance we shall not be slow to bring in corrective measures at the appropriate time.
I hope that the right hon. Gentleman, having ventilated these important points, will accept that we have done our best to strike the right balance. On the basis that this will probably not be the last word by this or any other Administration on this slightly archaic area, I hope that the right hon. Gentleman will ask leave to withdraw the amendment.

Mr. Denzil Davies: I appreciate that valiant attempts have been made in drafting the schedule to prevent tax avoidance and I understand that it is not possible in legislation to stop it entirely. However,

I am not convinced by what the Minister of State said. If the operations are bona fide and commercial and not for the purpose of tax avoidance, these amendments would not inhibit them.
It is a matter of balance. We shall also keep an eye on these matters, as no doubt will the Government and the Inland Revenue. There will be another Finance Bill next year, and we shall have another shot at it then. I see the Financial Secretary smiling with pleasure at the thought of another Finance Bill. We shall keep these matters under scrutiny and we may come back to them next year.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Peter Rees: I beg to move amendment No. 143, in page 149, line 37, at end insert:

Orders of the Day — 'PART IIA

RELIEF FROM DEVELOPMENT LAND TAX

10A. Subject to paragraph 14A below, section 21 of the Development Land Tax Act 1976 (chargeable disposal where company ceases to be a member of a group) shall not apply where a company ceases to be a member of a group by reason only of an exempt distribution.'.

Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 144.

Mr. Rees: These amendments were tabled in response to a point that was ably made in Committee by my hon. Friend the Member for Gosport (Mr. Viggers). He pointed out that though we had built in a series of reliefs from income tax, capital gains tax and stamp duty to facilitate demergers, we had done nothing about development land tax. On reflection, we felt that that was an omission. In order to remedy it, we have tabled these two amendments.

Amendment agreed to.

Amendments made: No. 104, in page 149, line 46, after '1973', insert:
'or Article 8(5) of the Finance (Miscellaneous Provisions) (Northern Ireland) Order 1973'.

No. 144, in page 151, line 25, at end insert:

'Re-instatement of development land tax charge

14A. Paragraph 10A above does not apply if within five years after the making of the exempt distribution there is a chargeable payment: and the time for making an assessment


under section 21 of the Development Land Tax Act 1976 by virtue of this paragraph shall not expire before the end of three years after the making of the chargeable payment.'—[Mr. Peter Rees.]

Motion made, and Question proposed, That the Bill be now read the Third time.

Mr. Denzil Davies: Before we reach a conclusion one way or the other on the Bill it is necessary to sum up and draw together some of the threads.
Invariably debates on Finance Bills tend to become repetitive. We cannot easily avoid that, although I am sure that the Treasury Ministers would like to avoid it if they could. These debates tend to overlap. No doubt my speech will overlap what I have said in the past, and the Chief Secretary's speech, if he winds up the debate, will no doubt overlap some of the noble sentiments that he has uttered in the House in the past.
Before looking at the details of the Bill, it is only right to say that the economic background against which we are debating the Third Reading is worse than it was at the time of the Budget. At that time we had a Treasury forecast that the fall in output in the coming year would be about 2 per cent. to 2½ per cent. I should think that even the Treasury would now be prepared to admit—at least privately—that the fall in output is likely to be greater and may be about 4 per cent. in the coming year.
Bankruptcies and liquidations are now at a record high level. Manufacturing industry in many parts of the country is fast disappearing. Unemployment is climbing to 2 million and over. Neither this Government nor the Labour Government made a forecast of unemployment. I understand the difficulties of forecasting levels of unemployment, but the Government Actuary, for the purposes of the national insurance fund, assumed that unemployment would be about 1·8 million. The Government have more or less admitted—certainly the Chancellor seems to have admitted in the Select Committee on Treasury matters upstairs—that unemployment is likely to be higher than 1·8 million. It could be 2 million and will probably go higher than 2 million. Even more dis-

turbing is that next year one in seven young people will be out of work. That is the greatest tragedy of all in the growing unemployment from which we suffer.
On Friday the retail price index will probably be about 21 per cent. I know that that will bring a certain amount of pleasure to Treasury Ministers. I cannot understand why, because they have more than doubled the RPI since coming into office. If the RPI falls to 16½ per cent. by the end of the year—I do not know whether it will or not—it will be because the depression is deeper than the Government envisage. The depression in the British economy has come on faster and much deeper than the Government realise. If the RPI falls to 16½ per cent., which is still almost twice the figure when the Government took office, it will do so at the price—too high a price—of destroying much of our manufacturing base and of creating a level of unemployment which will be far too high.
The Government cannot blame the world recession or the increase in the oil price for this state of affairs. The Government are and have been primarily responsible for the high rates of inflation and unemployment from which we are suffering and for the problems in our manufacturing industry.
The Opposition believe that the Government have tried to reduce inflation at the expense of the unemployed and of private industry. In the main it is the unemployed who are bearing the brunt and the burden of the fight against inflation. We believe that inflation and unemployment are twin evils, which must be defeated simultaneously. We do not believe that one should use unemployment, whether directly or indirectly, whether intended or not, to try to reduce the rate of inflation. Why should the unemployed, the poor, and the people on social security benefits, have to bear the brunt of the battle against inflation? Often they have not even caused that inflation.
Moreover, there is not equality of sacrifice between different areas of the country. If unemployment is a consequence of the Government's antiflation measures, certain parts of the country are making a bigger sacrifice to try to reduce inflation—if that is the purpose of the policy—than are other parts. That is why the Government should


not proceed in August with reducing the development area status of so many areas that are bearing the brunt of the fight against inflation. If there is to be an unemployment consequence, it should be shared equally, not only between groups of people but between different parts of the country.
Last night we had a debate on the public sector borrowing requirement. The Opposition say that considerable damage has been done, but at least the Government still have an option open to them to try to repair some of that damage. It is no good Ministers saying that there is no alternative; of course there is. The first is to increase the Government's borrowing requirement at a time of recession. There is no reason why they should not increase their borrowing requirement. We have said consistently that there is no reason why the PSBR should not be increased to £10½ billion or £11 billion. That could be funded quite reasonably, in view of the amount of money that comes into the pension funds and various other institutions.
It is necessary to increase the PSBR partly because, as the Government know very well, unemployment levels will be higher than the Government thought when they produced the Budget and the Red Book. If unemployment will go higher than 1·8 million, money will have to be found somewhere to pay the extra unemployment benefit. It would be a disaster to try to find the increased amount of unemployment benefit by cutting public expenditure even further or by increasing indirect charges, such as national insurance payments. If the Government were prepared to increase the PSBR that would at least to some extent alleviate the problems of unemployment and would not make it worse, which is what would happen if public expenditure were cut.
It is not an attempt to resurrect Keynes to say that in a recession one should increase the PSBR. Plenty of good monetarist economists agree with that. I believe that the chief economic adviser to the Treasury agrees, and no doubt there are others in the Treasury who agree. Even Professor Friedman agrees. He has criticised the Government for making a fetish of the PSBR and for paying too much attention to the balancing figure between expenditure and receipts, which

is all that it is. We say "Increase the PSBR." That can be done, especially if inflation is coming down, as the Chancellor says it is, and it can be financed at lower rates of interest.
The Bill deals with the taxation of North Sea oil. I do not want to go into the matter in detail, but the revenues from North Sea oil are crucial for the development of the economy over the next 5 to 10 years. There have been debates, and there will be debates again, about what to do with the North Sea oil revenues. Unfortunately, if the Government are to make a fetish of the PSBR and of reducing it over the next four or five years, that deprives them of the ability to use those revenues for the benefit of the British people.
It may be that in the past, because of our slow growth, we were not able to maintain the kind of public expenditure that we would wish to have. But now we are in a different ball game. We cannot look at the matter in terms of the past; we can now look forward to a considerable increase in revenues. The Opposition believe that those revenues should be used for public investment in industry, in capital projects—investment to rejuvenate our manufacturing base.
If the Government keep on reducing their borrowing requirement every year, oil funds that would otherwise go into public investment—capital investment that also helps private industry—will be used more and more to pay unemployment benefit if they are not used for an increased PSBR. Those of us who read the recent article in The Guardian, by Mr. John Kay of the Institute of Fiscal Studies, recall that that is a point that he made—that on present policies all that will happen will be a high level of unemployment, and much of the North Sea oil revenues will go merely to pay unemployment benefit and keep people on the dole. If the money is used to cut taxes, it will go into imports, and some of it will go abroad to create privately owned assets.
We shall return to the question of North Sea oil, but it is right to mention it in this debate because it is germane to the Government's attempt to reduce the PSBR, instead of using oil revenues for the benefit of the economy and of the public.
As is self-evident, the Bill does nothing to help the unemployed and the underprivileged, and it does nothing for large sectors of manufacturing industry now suffering from the Government's policies. As far as I can see, the only people who will gain any benefit from the Bill are the owners of capital and high-income earners. When we go through the Bill we see in clause after clause a few million pounds here and a few million pounds there going to people with capital, people with property, and high-income earners. One has only to look at some of the income tax changes to see this.
In the Chancellor's efforts to increase the tax thresholds he was able, in effect, only to increase them by 11 per cent., which is below the rate of inflation. As a result of the abolition of the reduced rate band, as inflation progresses there is a tax increase in the Budget, because the right hon. and learned Gentleman has not been able to index the thresholds to the rate of inflation. Therefore, the ordinary taxpayer gets nothing from the Bill; when inflation is taken into account, we see that he gets nothing at all.
However, the higher-paid taxpayer gains considerable benefit from the Budget. For proof we have only to look at the clauses that extends the indexation provisions to the higher rate thresholds. As a result of the Bill, those earning more than £11,000 a year will have their higher rate thresholds automatically indexed and increased every year. That is a considerable benefit to a fairly small group of people who are receiving fairly high incomes.
The point was very well put in an article in The Sunday Times business section shortly after the Budget, under the heading
Hidden rise for the higher paid".
It said:
Highly-paid people, who had their tax burden eased last year by a reduction in the top rate to 60 per cent., are to get further hidden hand-out much better than those on lesser pay levels will receive.
It stems from an almost unnoticed measure in the April Budget"—
in fact, we did notice it, and we debated it in Committee and on the Floor of the House, and voted on it—
which … comes down firmly on the side of top-bracket people.

If inflation continues around its present levels to the end of the present calendar year, the married man on a £30,000 salary, if he gets nothing else, will for the tax year 1981–82 receive the equivalent of a 13 per cent, pretax pay increase.
This compares with only about 4½ per cent. for the man with the £5,000 a year pay slip
The article goes on to make the point that the man earning £5,000 a year gets very little. The main earning £10,000 a year gets very little from the Bill, but the man earning £30,000 a year benefits considerably.
One reason why we object to that, apart from its inequity, is that the tax benefits are not going to those who could improve supply in British industry. We heard a great deal from the Conservatives in Opposition about the need to improve what was described as the supply side of industry. I take that as manufacturing industry in the main. The people in manufacturing who can improve the supply side—the middle manager, the foreman on the shop floor, the people who work with their hands or who work on the shop floor in a small or medium manufacturing unit—do not earn £30,000 a year. They earn nothing like that. They are not getting any benefit from the Finance Bill. Those who benefit are those in the financial sector, those in the banking sector and those in the higher echelons of the Civil Service, where earnings are higher. They do not work in the main productive industries of our country, yet they will benefit the most.
The Bill benefits not only those who earn high incomes but those who own capital. If one looks at the Red Book, one sees that the loss of revenue from capital transfer tax relief over a full year amounts to £130 million. The loss of revenue from the capital gains tax provisions amounts to £70 million. Therefore, £200 million is being given away to those who own capital and to those who do not need such largesse from the Government. If all the reliefs given to the better-off and to those with capital were added together they would amount—at a conservative estimate—to £500 million. That amount is being provided to those who are capable of looking after themselves and to those who do not suffer from inflation. Such people are not likely to be unemployed or on social security. They are the only ones to benefit from the Bill.
Those facts point to the difference in philosophy between the Conservative Party and the Labour Party. If £500 million is available—and apparently it is—it should be used for other purposes. Even in recent debates we have heard about the problems of the National Health Service and about the problems of providing kidney machines. We have heard about the disabled who suffer from inflation and whose benefits have not increased at the same rate. We have also heard about the problems of the unemployed. In other legislation, the Government are engineering a cut in unemployment benefit. We have heard that child benefits will not be indexed to the cost of living. However, £500 million will be provided to those who are able to look after themselves and who do not need such benefits. That is the difference in the philosophies of the two parties.
If £500 million is available, it should be spent in order to benefit the least well-off in our society. We saw and heard a manifestation of this attitude during last night's debate on immigrant children. During that debate we ascertained—as we did upstairs—that the cost of reinstating or maintaining the present system would be about £7 million. Last night we received an insensitive reply from Treasury Ministers, which was even worse than the replies that they gave upstairs. I do not say that £7 million is the only reason why the Government are not prepared to accept our amendment. We argued only that £7 million should be allowed for a group of deprived and mainly poor children. The Government did not offer any sensitivity, let alone any help or benefit.
We should compare the response that we received with the considerable sensitivity that Treasury Ministers show when Conservative Members, representing pressure groups, speak for the building industry and for various other groups in the City. The Government show considerable sensitivity and sympathy to Conservative Members, and sometimes their amendments are accepted, but when we argued on behalf of a group of immigrant children the Government showed no sensitivity and little sympathy.
I had thought that the Conservative Party was concerned about the public sector borrowing requirement. If I were to go through all the amendments that

Conservative Members have tabled on behalf of various pressure groups, and if I were to add the costs in terms of the PSBR, they would probably amount to another £500 million. The Government did not accept their amendments, but Conservative Member after Conservative Member showed little concern for national finance, for balancing the budget, or for keeping it within reasonable limits. Every pressure group wants £50 million or £100 million. That would amount to a considerable sum. It demonstrates that the Conservative Party is concerned not about these issues but about advancing the interests of various propertied groups in the community. We have seen that time and again.
Those who have sat through Finance Bill after Finance Bill know that such things happen. Conservative Members will be back next year asking for a little more and tabling other amendments. They represent certain groups, and no doubt they go back to them and show how assiduous they have been about looking after their interests.

Mr. Nicholas Baker: Does the right hon. Gentleman accept a principle that the right hon. Member for Leeds, East (Mr. Healey) accepted? Does he accept that high-paid, high-taxpayers are to a large extent responsible for starting the businesses that provide jobs? Secondly, does he accept that such high-taxpayers left this country as a result of the pre-left this country as a result of the Labour Government's high taxation provisions?

Mr. Davies: I do not think that such people did leave the country. When the present Chancellor of the Exchequer was in opposition he bemoaned the fact that Tom Jones and Engelbert Humperdinck had left the country, but Tom Jones did not come back after the last Budget. The Tory Party seems to believe in the myth that there will be growth in the economy. The Government's first Budget cut taxes, but we have not seen any such growth. Indeed, the economy has spiralled downwards. I do not expect that we shall see any growth as a result of so-called entrepreneurs.
We oppose much of the Bill. We shall vote against it, because the Government have done nothing to tax the excess profits of the banks. They have not taken sufficient action in relation to the oil


companies. We have already debated those subjects. If the Government wanted revenue in order to help those who suffer most from inflation and unemployment they could have got £200 million from the banks, and a few hundred million pounds from the oil companies. It should have been possible to provide £750 million—on a conservative estimate—for the disadvantaged, without increasing the famous PSBR.
This Bill may not be as dramatic as the last Bill, but it is further testimony to the Tory Party's ever-vigilant crusade in the interests of property and those who have it. The Bill shows little sympathy for those without property, privilege or influence. It does nothing for the unemployed, the under-privileged and the poor. It speaks volumes for the privileged, the wealthy and those who have influence. Apart from everything else, that is a good reason for voting against the Third Reading.

Mr. John Browne: In general, I support the Bill. I shall not repeat the details of that support, because I set them out on Second Reading. The revival of an economy is somewhat similar to the sowing of seeds. The Government must give incentives, and we must act to ensure that they are taken up. It is people who create wealth. They create a sound economy. The Government will not and cannot do that.
Monetarism is a difficult option, but it is the correct seed. It is difficult to sow, and it requires great courage and determination to ensure that it comes to fruition. The Prime Minister and the Chancellor of the Exchequer and his team could not be better farmers. They have tremendous ability, determination and, above all, courage to sow the seed of monetarism. The climate is good in the Western world. Even at the grass roots our people accept that monetarism—the reality—must be accepted, although it is a painful doctrine.
Most people may not like monetarism because it is a hard and bitter pill, but they accept that sound housekeeping economics are a "must" and that the days of false money must be stopped. On the other hand, the weather is not so good. It is far easier to sow monetarist

seeds into world and national growth. The sad thing is that we are facing a deep world recession, and that makes things very difficult.
The most worrying element of all is the soil—the economy into which we sow the seeds of monetarism. We have found that the soil is very hard—it has not been worked for ages, it has had years of stagflation and to some extent it is unreceptive to the incentives and disciplines of monetarism. It is here that the really difficult things must be done. The employment cartels' bad effects must be reduced so that market forces can penetrate employment and wage negotiations as a prerequisite for the success of monetarism.
At present, monetarism is greatly affecting employees in the private sector, which is wide open to the effects of the market. But that is not so in the public sector. We have a lot to do in this respect, and that fact must be taken on board by the Government. On one side we have trade unions, particularly those operating a closed shop and no secret ballot, and on the other we have public sector employers who can pay both wages and prices that are totally unrelated to the market place.
The second point relating to the tilling of this ground is the matter of indexation. In this Bill we are approving the indexation of tax thresholds and allowances. I believe that indexation cannot be a part of the Government's philosophy if they really mean business about breaking the inflationary spiral. That is so for two reasons. First, indexation builds in increased Government expenditure and, secondly—and much more insidiously—it reduces the will to beat inflation. Worse still, it actually creates the will to keep inflation going.
All of us who benefit in any way from indexation—and we are all taxpayers—lose, to some degree, the will to swallow the bitter pill of monetarism and, therefore, defeat inflation. I have in my constituency a number of retired Army officers and civil servants who benefit from index-linked pensions. There are some people who benefit from the indexation of salaries. If people are insulated by their index-linked salaries, tax thresholds and pensions, they actually benefit from inflation in that they have an advantage over anyone else living in


the same village or town who is not index-linked. Any spare income they have they can invest in a capital account or property and receive benefit in terms of capital growth. That is the most insidious part of all, for it reduces the grass roots support that we need to beat inflation. That is particularly so if the Government intend to do it in a realistic way, because monetarism is the hard option—the bitter pill.
I urge the Government, most strongly, not to accept the continuation of indexation. They must give real thought to breaking down indexation. When I hear siren voices talking about the Government issuing an index-linked bond in the gilt-edged market, I realise that this is a matter of great urgency.
My third point is that I applaud the provisions in the Bill relating to small businesses, but I do not think that they go far enough. We all abhor the rise in unemployment. The difference between the Labour Party and the Conservative Party is that we accept that unemployment is a necessary agony through which we must go to get our economy straight. I believe that unemployment will get worse. I believe, too, that we are being optimistic when we talk about 2·3 million unemployed next year. It could be a lot worse. While we have unemployment in the major dying and dead industries, we are not getting sufficient growth in new and small businesses. Indeed, we are behind target. Therefore, the targets that we set ourselves and the incentives that we give to new and small businesses must be increased, because that is the only true way in which we can solve the unemployment problem.
The right hon. Member for Llanelli (Mr. Davies) mentioned the problem of youth unemployment, which is very serious. We must ensure that the placement of the unemployed is in real, profitable jobs, and that will come, by and large, only from the new and small business sector. If our country is to achieve the necessary technological revolution, and if we are to maintain a higher standard of living than other countries, we need to ensure that 80 per cent. or 90 per cent. of that new employment comes from the new and small businesses. We should urge the Government to do much more and give more liberal allow-

ances to the new and small business sector.
I shall not delay the House any longer, but I hope that I have made my feelings known. I applaud the Bill because, generally, it shows a real analysis of the desperate and unpleasant problem facing this country. This is the first time in my adult life that a Government have had the courage to face the facts and take effective action. I wish my right hon. and hon. Friends all good fortune, and I hope that they will hold on and not be tempted in any way to back off.

Mr. Martin J. O'Neill: Before I came to this House I did not appreciate that people like the hon. Member for Winchester (Mr. Browne) really existed. I say that with the greatest respect. I have always felt that it was very dangerous to try to sustain a metaphor throughout a speech. At the beginning of the hon. Member's speech I felt that the business of sowing seeds and developing an agricultural metaphor was a bit difficult. I began to appreciate it as the manure was heaped on the land of England. Then, later, I saw quite clearly that this was not the development of an agricultural metaphor but simply a scorched earth economic policy—that we should burn and destroy and hope that after that there would be some growth.
This Budget affords no opportunities for growth. In the forecasts for the next 15 to 18 months we see none of the indicators that would suggest that by December 1981 we shall have regained the position that we were in in May 1979. The London Business School gives one of the more optimistic forecasts, with wages and salaries this year expected to rise by 16 per cent., and 13 per cent. in the year after. Prices are expected to rise this year by 17·7 per cent., and in 1981 by 14·1 per cent. Those figures to do not suggest a meaningful regeneration in our economy or a great improvement in our conditions compared with May 1979. If we judge the Budget by the improvement in living standards of those who have benefited from the £500 million tax handouts, we realise that it is a Budget for a selected few.
It is customary for other hon. Members to have a go at the South-East in these debates. I shall not deal with the


rise in the number out of work. However, last month's unemployment figures show a record drop in the number of job vacancies in the South-East. Conditions are getting exceedingly bad. No longer will hon. Members from the fat, plush South-East constituencies be able to return there at the weekend and not worry about unemployment. By the end of the summer the youngsters leaving most of the schools in the South-East, though perhaps not the Winchester comprehensive, will be looking for jobs. By September or October hon. Gentlemen will be glad to return to the House from Monday to Friday to get away from people ringing them to complain that their children cannot find employment.
Since the Budget was announced, many firms in my constituency have gone out of business. Others are teetering on the brink. I was asked to visit a small firm which makes pallets for the transport industry and which employs 20 men. There is no padding. There is only one salesman, and everyone has a proper job. It is about the second biggest producer of pallets in Scotland. The owner told me that he would probably have to close down, as he was running out of orders. He had never had a bank loan or any trouble with overdrafts. Any money that he had saved had been eroded by inflation or thrown away in sustaining the business that he had nurtured over the years. He said to me "I am not political. I just vote Conservative." When he comes to me looking for a council house, he will doubtless tell me that he voted Labour. He did not unduly concern himself with politics, because his life had always been fairly comfortable. He was now questioning why he had elected a Tory Government if that was what they were doing to the country.
Last year's election was a regional victory for the Conservatives. North of Watford most of us knew what was likely to happen if this Government came to power. The Budget is proving to the remainder of the country that the Government are incapable of doing anything for the vast majority of people.

Mr. John Major: Does the hon. Gentleman recall a most remarkable speech made by his right hon. Friend the Member for Leeds, East (Mr. Healey) at the Lord Mayor's banquet in

1976? The right hon. Gentleman forcefully made the point that there was a time lag between economic cause and subsequent result of 18 months to two years. If the hon. Gentleman accept that, does he also accept that many of the problems faced today are the results of actions taken 18 months or more ago, before this Government came to power?

Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. Can you please point out any reference in the Bill to the Lord Mayor's banquet of 1976? I understood that on Third Reading we should be discussing what is in the Bill, and not what one would like to see or what the Lord Mayor or the Chancellor said. We have had a long discussion. We should not start talking about what someone said three or four years ago. May I ask you to interpret the rules strictly? Some of us feel that we have spent long enough on this matter.

Mr. Deputy Speaker: The hon. Member for Clackmannan and East Stirling-shire (Mr. O'Neill) was speaking on an intervention. I do not believe that there is anything in the Bill about the Lord Mayor's banquet. However, on Third Reading of the Finance Bill it is traditional to allow a fairly wide debate.

Mr. O'Neill: I am not responsible for what my right hon. Friend the Member for Leeds, East (Mr. Healey) says after he has had a good meal. Had the hon. Gentleman been in the Chamber when I started my speech, and had he listened to what I had to say—

Mr. Major: I was here.

Mr. O'Neill: I was talking about the period from May 1979 to December 1981. Even such indicators as the London Business School, which is regarded as sympathetic, suggest that the country's economic performance will be miserable in that time scale. The period that I am talking about covers about 30 months, starting from the Budget of last year, which was to be a liberating Budget, and this Budget was to be a further step along the road.
Any number of quotes can be bandied about of what the previous Government did or did not do, but they do not alter the fact that this Government have the power. They have a majority, and


they are making an incredible mess of the economy. There is no chance of an improvement until they change their policies or leave office.

Mr. Allan Stewart: We had interesting debates in Committee on excise duties and petroleum revenue tax. The use of oil revenues was referred to by the right hon. Member for Llanelli (Mr. Davies).
I make no apology for raising yet again the issue of enterprise zones and how successful they may prove. We can now probably take a balanced view of the likely consequences of the Government's initiative in making provision for enterprise zones, including that in west central Scotland, near my constituency. I pay tribute to the Labour district councils, in Renfrew, Glasgow and Clydebank. Despite doubts and political suspicions, they have responded positively to the Government's invitation to submit proposals for an enterprise zone in west central Scotland. In the past regional policy has suffered from inevitable political pressure to constantly extend boundaries. If an area has problems, an area nearby will almost certainly have similar problems.
I represent a constituency in a special development area, and I warmly welcome the changes that the Government are making in the coverage of development areas. Particularly at a time of recession, it is sensible to concentrate resources in the areas in greatest need of extra incentives and jobs.
I hope that one of the long-term effects of enterprise zones will be that the politics of regional policy will work in reverse and that there will be constant pressure from surrounding areas that want to become enterprise zones. I hope that the Government will be flexible in responding to such demands, so that the boundaries can be extended throughout our inner cities and beyond. I stress the importance of that approach—growth from below through the Scottish economy.
We have benefited greatly in Scotland from investment by multinational companies, from North America and elsewhere, which provide about 20 per cent. of Scotland's manufacturing jobs and have provided technology, exports and management expertise. However, that

source of jobs will not be available to the same extent in future, however successful Scotland may be in attracting jobs. We cannot look to that sector to provide all the jobs that we need.
People have asked whether enterprise zones will work and have questioned whether the will is there and whether there are entrepreueurs waiting to be energised in places such as west central Scotland. We ought to be positive and optimistic. We already have in Glasgow an area called the Barrows, which could be described as a sort of enterprise zone. Trading takes place there every Saturday and Sunday and is a tribute to a great deal of enterprise.

Mr. John Heddle: (Lichfield and Tam-worth): The pessimism that the Opposition exude about enterprise zones is reminiscent of that wonderful Guinness advertisement
I do not like it because I have never tried it.

Mr. Stewart: My hon. Friend has summarised the attitude of the Opposition perfectly. They are pessimistic about the prospects, but I point out to them the success in west central Scotland of Clyde Workshops, a programme initiated by the BSC to provide small units, and the success of projects carried out through some of our universities that have been trying to encourage new enterprise. They have found that their courses and programmes are constantly oversubscribed
We ought to be optimistic. I believe that if we give those in west central Scotland and other depressed areas the chance to create wealth and jobs they will take it.
We had a particularly interesting debate in Committee on excise duties. There was, I think, a consensus on the view that it makes no sense to say that we ought to discourage people, with health warnings or whatever, from consuming alcohol and tobacco, but not to maintain the real price of those products. That is a nonsensical policy and I hope that in future Finance Bills the Government will at least maintain, through taxation, the real price of those products. That should give the lie to the comments of some Labour Members who claim that my hon. Friends are subject to pressure groups. I am sure that my suggestion


will lead to harsh words from those in the industries involved.
The right hon. Member for Llanelli mentioned petroleum revenue tax and the use of oil revenues. There are ideological divisions in that debate and it is difficult to forecast the likely scale of oil revenues. The hon. Member for Clack-mannan and East Stirlingshire (Mr. O'Neill) and I visited Ireland recently with the Scottish Select Committee. I hope that he agrees that one of the points that struck home was the attractive corporation tax system in the Republic, which guarantees industrialists who set up there a nominal 10 per cent. rate of corporation tax which, with similar reliefs to those in this country, means an effective zero rate between now and 1990. That is a significant incentive to industrialists, especially because of the stability of corporation tax over the next decade and beyond.

Mr. O'Neill: The officers of the Irish Development Agency who told us about the corporation tax arrangements also explained that the agency was an interventionist body which was prepared to provide all sorts of assistance, to help with training and to spend vast sums of public money at the same time as affording attractive tax incentives.
The hon. Gentleman suggests that we should introduce one part of the package, but he should remember that there were many other aspects which his hon. Friends would not be prepared to accept, because they were semi-Socialist.

Mr. Stewart: I disagree with the hon. Gentleman. Of course the Republic provides selective assistance, and so on, but the evidence is that the grants and selective assistance add up to a similar package to that available in this country, especially in Northern Ireland. There are differences of detail, but the major difference is the corporation tax framework.
Labour Members talk about using oil revenues for public investment, while my hon. Friends concentrate on using the revenue to bring down inflation, direct taxes and capital taxes. We should also put into the debate how we could use the revenues to reduce corporation taxes. I am not suggesting that we should change immediately to the Irish system,

though that would have an immense effect, but let us not forget in the continuing debate about the use of oil revenues the possibility of using them to ease the impact of corporation tax on our wealth-creating sector.

8 pm

Mr. Donald Anderson: The debate has ranged from the parable of the sower, which was repeated by the hon. Member for Winchester (Mr. Browne), to the fairy tales of the hon. Member for Renfrewshire, East (Mr. Stewart).
In the view of the hon. Member for Winchester, the sower of monetarism dispersed the seeds widely, but our criticism is that the seeds fell on selective ground and that the areas that I and most of my hon. Friends represent receive few of the seeds.
We heard in the hon. Member for Winchester's description of the difficult climate perhaps a beginning of the mythology that may grow that though the seeds were sown there was no benefit, because of factors outside the control of the sower.
As for the fairy tales of the hon. Member for Renfrewshire, East, he represents an assisted area and I suggest that he should ask himself honestly whether his area is better placed now than it was before the Government announced their new regional policy on 19 July last year.

Mr. Allan Stewart: That is not the question. The question is whether areas that the hon. Member and I represent will be better off when the Government's policies work. I believe firmly that the answer is "Yes".

Mr. Anderson: When? The hon. Member and I look forward with great interest to see the thrust of this Government's policy in terms of their assisted areas and in terms of the people they are assisting. The improvements for those with capital that have resulted from the Finance Bill will not go to people in his area or mine. They will go to people in areas of the country that are already prosperous.
The hon. Gentleman commended the changes in assisted area policy in July last year. He knows as well as I that the motivation of those changes was not


the improvement of Scotland and Wales. The whole reason was part of the cut back in total public expenditure. The hon. Gentleman talked of the enterprise zones as though half a dozen zones of 500 acres, scattered around the country, will have any effect on the totality of unemployment. We are bound to be sceptical of these zones. How will success be judged in this context? Because of the new grants and rate-free areas, there may be success for the relatively small areas of privilege encompassed within the zones. In a wider context, with the possibility of hedge hopping, one may come to a different conclusion.
I invite the hon. Gentleman to examine what the Government mean by the criterion of success. Will any new jobs be created in these enterprising zones? Or will there be a transfer of jobs possibly from the same travel-to-work area? The proposal is a pipe-dream. Labour local councils in the hon. Gentleman's area and in my area are rushing to put in bids for these enterprising zones. Why? Because they are desperate for jobs. They will grasp at any straw that comes from the Government.
We do not know yet what the Government will do to compensate local authorities for the infrastructural investment that will be necessary in these areas. What can prevent a large part of these enterprise zones, without planning controls, from simply being cluttered with warehouses and scrap dealers and being an environmental eyesore? Anyone who looks objectively at the enterprise zones must have a basic scepticism about the motivation and the likely effect.
A number of hon. Members have touched upon the regional theme. One clear picture in terms of electoral configuration that arose from the general election was the two nations of this country. Rightly or wrongly, the Labour Party gained few seats in the South-East. We maintained, by and large, our support in the North-East, in Wales, and in Scotland. That was the picture—unfortunate in national terms—that emerged. I ask whether that electoral map has changed as a result of the policies pursued over the last year.
Have the Government, in their financial policies, sought to build bridges between the two nations? Or have they

deepened the ditches that have divided regions and divided people in our country? I hope that this is a matter of considerable concern to the Government. According to their policy last July, a thousand blossoms were to bloom and incentive was to be the order of the day when industrialists, with the tax concessions granted them, were going to invest. That policy has been knocked off course by the increase in VAT. Do the capital advantages of the law contribute to the building of bridges or deepen the divide that exists? The answer is clear. The Government, by the signals that they are giving the country, the details of the Finance Bill, the sins of commission in respect of the benefits to the haves and the sins of omission in failing to tackle the absurdity of the excessive bank profits, have shown whose side they are on. Where, in the total financial policies of the Government, has any benefit been accorded to the less fortunate people in society? Where has there been any benefit to the unemployed? Where has there been any real benefit for the assisted regions? This is part of an inequality Budget. The one-nation group that used to exist in the Conservative Party is no doubt now designated as wet and wholly ignored by those in control of Conservative policy. The policy is part of an assault on deprived people and deprived areas.
The Government, no doubt, answer, as did the hon. Member for Renfrew-shire, East, by saying that we should wait and see. Those monetarist seeds, we are told, which are being sown, perhaps on stony ground, will take time to mature. All will be well for the country and the assisted regions in time. According to the Government, there is a trade-off between levels of inflation and employment that will have to be borne until the fruits of the policy are seen. That would possibly be an acceptable argument if there were equality of sacrifice between different areas of the country in response to the national call to combat inflation.
The effect is unequal Different groups of people and different regions are being asked to bear a disproportionate part of the price in the battle against inflation.

Mr. Nicholas Baker: Does the hon. Gentleman think that when income tax rates for all income tax payers were


raised by the previous Labour Government those taxpayers felt that they were participating in achieving equality of sacrifice?

Mr. Anderson: To create employment and to regenerate the depressed areas, I would be prepared to see an increase in direct taxation. I make no secret of that to my constituents. It is one way of increasing equality. I would ask now for an increase in public expenditure as a means of equalising the disproportions in society between the "have" individuals and regions and those that do not have.

Mr. David Winnick: Does not my hon. Friend agree that the reduction in direct taxation under this Government has not benefited the vast majority of our constituents, who are facing a heavier burden in view of the increase in indirect taxation.

Mr. Anderson: That is the whole point. I have a concern shared by all hon. Members about the increase in the divide within Great Britain that is being pressured by the Government and their policies.
The Prime Minister is coming to my constituency on Saturday. She will speak to the party faithful. I do not know what possible cheer she can bring to South Wales, which has suffered so much from her policies. I hope that she will pause before a large poster site on which, during the election, appeared a poster declaring "Labour is not working". It depicted a long trail of people who were paid hacks of Saatchi and Saatchi, the Conservative agents.
I invite the Prime Minister to meet, not the people who were paid by Saatchi and Saatchi for pretending to be unemployed, but the real unemployed who have been made unemployed as a result of Government policies. I could take her on a tour of South Wales and show her not only the steel industry but a group of other industries which are dismissing men as a direct result of her policies. I wonder whether she will fly to the party faithful or whether she will pause and see the depression which she and her colleagues are creating in the regions.
The benefits that go to the high earners will not come to areas such as South Wales, the North-East or Scotland.

They are low-wage areas. Our wages are boosted only by the relatively high-wage steel industry. As a result of the Government's unrealistic targets for cash limits on the steel industry, and their effects on Port Talbot and Llanwern, the high wages will be lost.
The Budget benefits the wealthy and is totally unfair. We have a Government of comfortable people providing benefits for the comfortable. I am reminded of the hospital announcement which states "Operation successful—but the patient died." We might be approaching the time for a similar announcement about Government policies. In 1984 the operation might be successful in that the level of inflation might be brought down to the level that the Government inherited. Technically the operation might be successful, but at what cost? It will be at a cost of record bankruptcies, record unemployment and at a cost of deepening the social divide and increasing social unrest, which no Government should seek.

Mr. Richard Page: Apart from the ritual cries and breast-beating this evening, the debate has been good-tempered. On Report we covered about 100 clauses and 18 schedules with good humour and a degree of comradeship. I thank my right hon. and hon. Friends on the Treasury Bench for the skill, ingenuity, kindness and delicacy with which they said "No" so many times in so many different ways.
Some Finance Bills are recognised as turning points. In time, this Finance Bill might be recognised as a turning point for smaller businesses. Too often we think of the smaller business as the corner shop. It is fashionable to get on the smaller business bandwagon. However, a smaller business is one that employs up to 200 people. Germany operates the same criterion. In Japan a smaller business employs up to 500 people and in the United States—which is always bigger and better—it can employ up to 1,500 people.
I shall discuss three important aspects connected with the smaller business. Clause 54 provides for a 100 per cent. alowance for workshops up to 2,400 sq ft. That is a recognition of the fact that in the past we have suffered from the


"bigger is better" syndrome. In the North, many large factories remain unoccupied. I hope that with the conversions from the private side we can create more small units to allow smaller business men to get on the road towards creating employment and wealth for the country.
I shall not dwell on the subject of enterprise zones. In the past, authorities and Governments have tended to say "Let us rip up a green field; let us take more of our valuable land". They have ignored the rotting city centres, which have gradually decayed. It is vital that we give the city centres a try. We may fail, but I hope that we shall not. The Opposition seem to be against such a policy simply because it has never been tried. Let us give it a try and see whether it works.
I record my appreciation of the temporary dips on stock relief and of the provision to allow the smaller business faced with deferrals of up to £100,000 to be removed from the net indebtedness clause. That will be of tremendous importance in maintaining liquidity at this difficult time.
The Budget started to create the environment and the mental attitude to encourage people to start their own businesses and to provide more opportunity to create wealth and employment. The Opposition live in an Alice-in-Wonderland world. Money was put into the system so that now about £1 in £7 paid out in public expenditure is interest on the money which the Labour Government borrowed and piled up against us.
It took us 300 years to get the national debt to the level that it was in 1974. The Labour Government managed to double it in five years. We and our children will have to pay off that debt. If we do not live within our income, we shall go down. Even after the cuts, we have to pay and borrow at the rate of £1 million each hour of the day.

Mr. Anderson: Do the record interest rates assist in that process?

Mr. Page: When we have to squeeze the excess money out of the system, of course it will be painful, and of course it will hurt.

Mr. Major: Are not the record interest rates the result of borrowing over the last five years?

Mr. Page: My hon. Friend is right. Unfortunately, the Opposition do not live in a real world. They think that there is a bottomless pit from which they can continue to borrow, and that it does not have to be repaid.

Mr. J. F. Pawsey: Will my hon. Friend reflect on the fact that the largest item of Government expenditure is the repayment of interest on the debts incurred by the previous Administration?

Mr. Page: My hon. Friend is right. We in this country seem to fail to appreciate the effect on our industries of the haemorrhage of inflation. If, over the past five years, our companies had brought in current cost accounting, they would have been seen to be losing money and getting into debt year after year. It is only now, when we face the reality of having to live within our income, that this painful adjustment has to be made. I blame the Labour Party for running this country into that decline.
I should like to think that the Budge will mark a turning point from which we shall go on in the future towards the creation of equity, of better opportunities for loans, and of investment for the creation of smaller businesses. Labour Members have mocked all this, but they created the large inefficient unit. Just as the dinosaur was superseded by the smaller mammal, so in this country the smaller business will have to take over to provide employment to bolster the gross national product and provide the social standards that are required by the people.

Mr. Richard Wainwright: I confess to astonishment that the hon. Member for Hertfordshire, South-West (Mr. Page) had the gall to lecture the House on the subject of the national debt, bearing in mind that he supports a Government who are offering to the world British Government debt at 14 per cent. well into the next century—something that our children and grandchildren will live to curse—and who, in spite of their alleged tremendous faith in their anti-inflationary remedies, resolutely refuse to sell any index-linked bonds. Therefore, the less that Conservative Members talk about


the national debt, the more their face will be saved.
It is well known that this Bill is one of the vehicles of Government economic strategy that was begotten by miscalculation and born out of public misery, as the report of the Treasury Select Committee recently made clear on an all-party basis. I marvel at the Government's obstinacy in persisting in this demoralising course. All this was encapsulated earlier this evening in a memorable phrase used by the Financial Secretary in resisting an amendment. He said:
We stick where we have stuck.
Let that be carved over Conservative Central Office in Smith Square. If the Conservative Party cannot afford six Anglo-Saxon words, I suspect that three Latin words would convey the same meaning.
Just where are they stuck? They are stuck with what is admitted by their spokesman to be a mystery tour with no timetable. None of them can tell us how many years of million-rate unemployment there will have to be before any reasonably lower degree of inflation is reached. We have learnt in recent days that it is not only a mystery tour, but, even worse, a circular tour. When we ask how long the low prices will last when they have squeezed all the excess money out of the system, and how the Government will re-expand the economy without starting the inflationary cycle again, we get no answer. The answer, of course, is that if on this circular tour their Government bandwagon eventually passes a station called "low prices", it will whizz past at speed and be on the upward grade of the switchback almost immediately. We shall then be put through the misery of the inflationary cycle again.
In this connection, the Budget was a demoralising affair for the British people. The only reason why it has not been more condemned is that it is a dismal object against an even more dismal background, and so it does not stand out in all its horror quite as much as it otherwise would. It certainly marks the end of one part of that dishonest combination which helped to win the Conservatives the last election—the idea that huge tax incentives can be combined with a strict monetarist policy. In this Bill we say

goodbye to any idea of tax incentives or of doing anything except add to the load of taxation as the Bill does.
The Government are relying on two lifebelts to get away with what they are doing. The first is the disarray of the official Opposition. The second is the hope of enormous revenues from North Sea oil, which the Government have done nothing to earn, and nor has anyone else in politics. I suspect that neither of those lifebelts will keep them afloat. However long the disarray of the official Opposition lasts, there is no doubt that public disquiet will somehow make itself felt. I only hope that it will make itself felt peaceably, through democratic channels. The Government must not rely upon the public being quiescent for much longer, even if the traditional party channels expressing opposition are at present broken up and not doing their job properly.
The Government also make a great mistake if they suppose that the British public are a lot of peasants who will calmly accept the misappropriation of the wealth that the good Lord has given us in the North Sea as a political gimmick by a Conservative Government in desperate straits. The mass of the British people are sufficiently well-grounded in biblical and liberal politics to know that God gave the land to the people. He did not give North Sea oil to the Conservative Party. The people will demand that North Sea oil be used for the long lasting benefit of the British people, and not to win the next election for a broken-down Government.
I wish to make one more comment on the Bill. It further encapsulates one of the most despicable aspects of the Government's outlook, namely, that to save a few Inland Revenue clerks we must descend to having a crude taxation system that would discredit a banana republic. The lower rate band of income tax has been one of the most civilised parts of our tax system for generations. Even I can recall the time when we had three reduced rates of income tax. It is a civilised system to let out the clutch gradually as the taxation load is picked up. It introduced people to the tax system at a low rate. Now, with a crow of triumph, those vandals and philistines at the gate have removed the last of the reduced rate bands. They say in


favour of their proposal that it enables them to get rid of 1,300 Inland Revenue clerks, at a time of unemployment.
The same is true of other parts of the Bill. The Government refuse to have a civilised system of stock relief because they say that it would be too complicated to require more elaborate stock returns several times a year from large companies which take stock periodically as

part of their financial discipline. The Government have introduced all sorts of crude simplicities and defended them on the ground that they enable them to dismiss a few relatively low-paid civil servants.
The Bill does no credit to the Government. I hope tha tthey will not obtain their standard majority when we go into the Lobbies tonight.

Mr. Nicholas Baker: I was puzzled when trying to follow the speech of the hon. Member for Colne Valley (Mr. Wainwright), because I thought that the policy of his party was that the tax system in Britain was too complicated and required simplification. I was puzzled also to hear from the Opposition Benches a discussion of tax that reminds me of the real divide that exists about taxation. That divide has been caused because Opposition Members believe that the tax that people pay—whether they are rich or poor—somehow, before it is paid, belongs to the nation. Anybody who earns income and pays tax, whether rich or poor, will say that it is his money, and that by reducing direct taxation the Government are no more than giving back his money. People believe that. That is why the Opposition so often appear to be talking in wonderland.
I wish to make one brief, non-partisan point about a category of people affected by the charging rates in clause 18. They are excluded from any help under clause 27. I refer to non-resident partners of trading or professional partnerships resident in the United Kingdom. I declare an interest as a partner in a United Kingdom firm with overseas branches. The tax system discriminates against people in that category. If they are self-employed and spend a qualifying period of 365 days abroad they are not able to obtain 100 per cent. relief against income derived from their work in the way that someone who is employed is able to do.
That is a curious discrimination, for which I have never seen any proper justification. The arguments for such a discrimination are, first, that the individual, although still abroad, will derive benefits from the United Kingdom firm. That argument also applies to someone who is employed. The second argument is that it would be complicated and difficult for the Inland Revenue to make assessments. It seems to me that whether one is dealing with the self-employed or the employed there is no distinction between an argument in this connection.
My hon. and learned Friend the Minister of State, who is not in his place at present, is familiar with this point, because he has advanced those arguments

himself. I was surprised and disappointed to learn that the matter was not dealt with in the Bill. The result is that it is difficult for United Kingdom firms, both professional and trading, to attract people to manage their foreign branches. Lest any hon. Member thinks that this is a small, parochial point, I believe that it is something of which the House should be disabused. In fact, British professional firms—especially accountancy and estate agent firms—are now competing world-wide.
When listening to economic affairs debates in the House one sometimes gets the impression that the country earns its living only from manufacturing industry. That could not be further from the truth.
These professional firms compete on a world-wide basis. They earn foreign currency. This piece of discrimination in our legislation is a snag that ought to have been put right. I am sorry that it has not. I hope that my right hon. and hon. Friends will consider this matter and put it in their notes for inclusion in the next Finance Bill.

Mr. Frank Hooley: The Government's failure in relation to inflation would be comic if it were not so grotesque. The Chancellor is now boasting that by the autumn he hopes that the rate will be down to 16·5 per cent. While it is unlikely that that in itself would be successful, he does not seem to have noticed that it would be 60 per cent. higher than the rate which the Government took over when they came into office 14 months ago.
The situation with regard to unemployment is not grotesque but tragic. A major disaster is facing our young people, and the Government are doing nothing whatever which is effective to deal with that problem. During the debates, both upstairs and on the Floor of the House, I have heard nothing to suggest that the Government are even taking the problem seriously. That is a major indictment of their financial policy.
In fact, only half an hour ago a Conservative Member said that unemployment would go up to 2·3 million, and perhaps even higher. He suggested that that was something that we had to put up with. In fact, it is something that


people who are unemployed have to put up with, and the disaster is on them.
The interesting feature throughout the course of the Finance Bill, both upstairs and on the Floor of the House, has been the drip, drip of give-away—not on a great scale—to special property financial and commercial interests. Conservative Member after Conservative Member has put in a plea for this or that allowance, a plea for doubling this or that calculation, and a plea for this or that particular exemption. Ministers have graciously said that their hon. Friends have a point and that they were quite right in saying that we must encourage this Poujadiste here and that Poujadiste there. They said that the special pleading for special cases had to be listened to, as a result of which the money trickled away—perhaps up to £60 million, £100 million or £200 million.
Last night, Labour Members tried honestly and honourably to put in a plea for the people who really are in difficulties, given the present situation.
We put forward a modest proposal to help widows. It would have involved a small amount of money, and it would have given some help to widows in terms of personal taxation, but 270 Conservative Members trooped through the Lobby to crash down on it and destroy it.
We made a modest plea for a tiny minority in this country—the Asian families with children in India and Pakistan—probably only 22,000 people out of a population of 50 million. The cost to the Treasury would have been about £7 million, which in terms of national revenue is not a serious amount. We heard a legalistic, pedantic explanation from the Minister that it was impossible. It would be a breach of this principle or that principle. There was no possibility that this tiny humanitarian gesture could be offered, even over a short time. We did not suggest that it should go on indefinitely. But no, it could not be done. It would ruin the country's economy, and it would be contrary to the principles—whatever they are—that Conservative Members hold.
We suggested a modification of VAT, which we argued would help people on pensions and social security. We argued that it would modify wage claims and reduce inflation—the central theme of the Government's policy.

Mr. Richard Page: rose—

Mr. Hooley: I shall not give way. I wish to get on with my speech. The hon. Gentleman made a fairly long contribution a little earlier.
We made a suggestion about income tax. At present, a married couple on the supplementary benefit-plus rate would be practically in the bracket at which they would be required to pay standard rate income tax. That is a grotesque proposition, and I am astonished the the Government should be prepared to defend it. The lower band of income tax has been deliberately pushed up so that a person who is now earning less than half the national average industrial earnings goes straight into the standard rate tax band and will have to pay 30 per cent. of every pound of taxable income in tax.
We put forward those four propositions, but they were turned down by the Government. They were rejected, rejected, rejected, and again rejected.
In this Finance Bill there was one gimmick—the enterprise zones. I shall not go over the arguments again, as we have had a lengthy discussion on the Floor of the House. It has been pointed out by the Royal Institution of Chartered Surveyors that enterprise zones will do something to help the lucky owners of land in which these zones are designated.
The Government cannot be serious in saying that by designating 3,000 acres—about five square miles—to enterprise zones they will revive the country's economy. This is a silly, stupid gimmick, and it will create for the Government the sort of problems and difficulties that they encountered with the reorganisation of local government and the Health Service. It will produce many headaches. It has already produced a major squabble in Sheffield between local entrepreneurs and small business men as to who will get the pickings, if any. It is a totally irrelevant gimmick, of absolutely no value in terms of the economic problems of the country.
My right hon. Friend the Member for Llanelli (Mr. Davies) touched on one of the central points of our economic policy, namely. North Sea oil. At the moment, the Government are giving away the benefit of North Sea oil in taxation relief


to the income groups. North Sea oil is also being used to finance imports from our industrial competitors. The effective use of North Sea oil at the moment is to finance the modernisation of our major industrial competitors, in that it is financing massive imports of cars from Germany, Italy and France, as well as the imports of machine tools and other equipment. The beginnings of this enormous revenue will go to benefit our major industrial competitors.
The other part of the equation, as my right hon. Friend rightly pointed out, is that North Sea oil is financing the lengthening dole queues. The greatest economic asset that we have discovered or been given since the war is not being used as it should be—to modernise our industry and to build up our industrial power. It is being squandered on dole queues, imports, and the modernisation of the economy of our competitors.
I see nothing in the Bill to indicate that the Government will adopt a more constructive line of policy in what remains of their term of office.

Mr. John Heddle: (Lichfield and Tam-worth): I am very grateful for the opportunity to contribute briefly in the closing stages of what I hope will come to be regarded, in the fullness of time, as a historic Finance Bill. It is a Bill that will once again breathe a breath of free enterprise air into Great Britain.
It was free enterprise that made Britain the nation it was in the nineteenth century. But it is, sadly, the continual dependence upon more and more control from the centre since the last World War that has caused the industrial and economic decline of our country.
Of course, Labour Members find certain parts of the Bill objectionable, because they represent change—a change of thought, a change of approach; perhaps the right approach. We might not see the full advantages of this approach, but certainly our children will.
What worries me particularly about the contributions from Labour Members is that they poured cold water on optitimistic and objective solutions to the problems that have beset us for so long. Nowhere in the closing stages of this

Third Reading debate have I heard any sense of optimism or of the feeling "Yes, we can make it again." Instead, what we have is "Pessimism rules, OK." The Opposition Benches are denuded by apathy, by dejection and by defeatism.
We have been told by Labour Members that the enterprise zones will not work. With that attitude, enterprise zones might not work. Let us be positive. Let us go into the battle against inflation, the battle against continual, gradual and spiralling decline with optimism. We can win, we shall win—if we have the will to win. Nowhere in the criticism of the enterprise zones have we heard any constructive approach. With respect to the right hon. Member for Llanelli (Mr. Davies), for whom I have the highest regard and whose intellect is regarded highly throughout the House, the only constructive comment that he made was that we all represent sectional interests. I have news for the right hon. Gentleman. His right hon. and hon. Friends were elected by sectional interests. Most of them were elected because they were endorsed by certain trade unions, and they have come to the House to speak on behalf of those sectional interests.
Society is built up of sectional interests—of a concentricity of interests. Just as the geographical make-up of this country is composed of villages, towns and communities, so the economic life of Great Britain is made up of concentricity, sectional and specialised industries, widows, one-parent families, the disabled, pensioners, ex-Service men, the self-employed, the unemployed, builders, bakers and candlestick makers.
What is wrong with speaking up for sectional interests? I put that question directly to the right hon. Member for Llanelli. If each of us tried to be a specialist in a particular subject so that we could speak for sectional interests, the jigsaw of expertise could help to paint a picture of a profitable whole.
I should like to dwell on two points in the closing minutes of this Third Reading debate. I make my first point on behalf of the small savers—people who believe that capitalism and prudent finance is for them. That includes the majority. That includes the trade unions and their pension funds and the person who has a piggy bank tucked under the


bed in the third bedroom of his council house. Deep down we all believe in saving for a rainy day. Here I pay tribute to my right hon. and learned Friend the Chancellor of the Exchequer for the provision that he has included in the Bill for the unit trust movement. I refer particularly to the concessions in clauses 59 and 80.
I turn now to one sectional interest which can help to cure the deplorable level of unemployment that the Government inherited 14 months ago—the building industry. That industry cannot rely on the public sector to provide it with the funds to buy the bricks and mortar to build more monuments to State control, more council houses, more properties owned by the State. Let us revive the building industry by allowing it to provide nursery units, factories, shops, offices and starter homes for people who want to identify with freedom for themselves and to be masters of their own destiny.
I refer particularly in this context to the development land tax which was not the brain child of the previous Labour Government, but the handmaiden of an obnoxious piece of legislation which was their brain child—the Community Land Act—which my right hon. Friend the Secretary of State for the Environment is demolishing as the Local Government, Planning and Land (No. 2) Bill makes its stately progress to another place. The punitive effect of the development land tax has put a dead hand on the construction industry. I again pay tribute to my right hon. and learned Friend the Chancellor of the Exchequer who, in last year's Budget, reduced the level of taxation from 80 per cent. to 60 per cent. and in this year's Budget outlined provisions, incorporated in the Bill, for advance assessments on deemed disposal. The builder—the employer of skilled labour building homes for people at prices that they can afford—can now look forward to laying bricks and drains with one hand and not having to write a blank cheque with the other.
There is still much that needs to be done in the arena of the development land tax provisions. I make no apology for reminding the House of a Ten-Minute Bill that I introduced in March just before the Budget. There are many anomalies and iniquities still built into

the Act, which was the brainchild of the Labour Party when in power.
I think, for example, of the deemed disposal provision. It is the one form of tax that a taxpayer, in this case the construction industry, has to pay before a profit is made. It is also the only form of taxation where a development loss cannot be offset against a development gain. That is another iniquity. It is the only form of taxation that does not seem to differentiate between windfall or speculative gains and gains made during the normal course of business activity. Profits made during the normal course of business from land held as stock in trade should not be subjected to the same level of development land tax as windfall or speculative gains.
Similarly, I believe that any landowner, particularly a farmer, who sells some of his land for development should be relieved of the pressures of the tax if he reinvests the profits in buildings and plant and machinery to make his holding more profitable.
Opponents of the Bill should, in all honesty, call it a curate's egg of a Bill. Hidebound though they may be by the belief that the Government should provide and should control, they surely find it good in parts. Those of us who fervently believe in free enterprise believe that deep down in their hearts and minds the majority of the British people want to work hard and to rise to the challenge, that they want a breath of fresh air to be built into the rundown docklands and the rundown inner city areas of Birmingham, Leeds, Liverpool and Manchester. It can and will be done, if we can only bring back into our lives a sense that we ourselves can make it happen.
I thoroughly endorse the provisions of the Bill.

Mr. Stephen Dorrell: I hope that my hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) will forgive me if I do not refer to the building industry, about which he knows a great deal more than I.
I wish to refer to the speech of the right hon. Member for Llanelli (Mr Davies). I understood him to say that he would advise his right hon. and hon. Friends to vote against the Bill, basically for


two reasons. The first was that he disapproved of the distribution of the burden within the Bill. That is an aspect that has been fully debated. The right hon. Gentleman also made it clear that in his judgment the Bill did not imply a sufficiently large public sector borrowing requirement, and I should like to take him up on that.
I realise that in his relatively short speech the right hon. Gentleman could not be expected to advance an alternative economic strategy on behalf of the Opposition, but if he is to argue the case for a larger PSBR he must take the argument a stage further than he did tonight or than he has been prepared to do at any other time recently.
The most obvious question that occurs to anyone when he hears a speaker advocate a larger PSBR is "What is the advocate suggesting should be the implications for domestic monetary policy?" It is no good simply saying "We shall run a larger PSBR". One must go on to argue what one wishes to do with monetary policy. One can maintain the Government's monetary policy, in which case one must accept that a larger PSBR would lead to higher interest rates, or one must say that one wants to see a larger sterling M3, or whatever measure one chooses, and that one wants to see monetary expansion going ahead faster.
If, as I suspect, the Opposition's policy would be to allow monetary expansion to go ahead faster, funding the larger PSBR through faster monetary expansion, we must look at the consequences of faster domestic monetary expansion. That would lead to extra demand. In reply, I strongly argue that if no other policy were changed, it would lead only to a higher level of imports and to a substantial deficit in the balance of payments. A larger PSBR and faster monetary expansion would not, of themselves, lead to a sufficiently large devaluation of the pound. The result, in terms of extra demand or investment at home, would be that the balance of payments would run into a larger deficit. That would provide ammunition to those who argue in favour of import controls and wish to retreat into an illiberal and protected economy. I am a fervent opponent of that.
That economic prescription does not meet the problem facing the Government. Last week I suggested to my right hon. Friend the Secretary of State for Industry what the central issue might be. Although he disagreed with my remedy, he accepted that I had touched on the key issue, namely, the competitiveness of the productive sector of the economy. The quickest and most effective way of restoring that competitiveness is to allow and encourage a devaluation of the pound. My right hon. Friend argued that that would be unnecessarily inflationary. He said that he would prefer the competitiveness of British industry to improve by increases in productivity and by controlling unit wage costs by holding wages at a reasonable level.
No one would disagree with those two prescriptions. However, the argument that competitiveness can be improved solely by improving productivity and holding down wage increases does not meet the problem. That is not enough. That remedy would not work quickly enough to solve unemployment and the fall in output. Many hon. Members will have seen a report that appeared in the Financial Times earlier this week. It argued that the rise in the exchange rate and the fact that our rate of inflation was higher than that of our competitors had led to a decline of 30 per cent. in our competitiveness in the past 12 months.
It is unrealistic to expect such a gap to be made up by purely internal measures, such as improving productivity and controlling wage increases. It would require a 30 per cent. increase in productivity if we were to return to the competitive position that we held at the beginning of 1979. That is unrealistic. Even the German and Japanese economies have not come near such an increase in the rate of productivity. In good years, they experience increases of 4 or 5 per cent. Last week my right hon. Friend the Secretary of State and I agreed that competitiveness was the key issue. If that is so, other measures, apart from those to improve productivity and hold down wage increases, will be necessary if we are to restore that competitive balance.
I support the Bill because I share with my right hon. and hon. Friends on the


Treasury Bench the objective of improving the competitiveness of British industry. I suspect that they believe that that can be done more quickly than it can be. However, I profoundly disagree with the Opposition's view that by running a larger PSBR, without directing the monetary consequences to the real problem—the exchange rate—they have found an adequate prescription for economic recovery.

Mr. John Garrett: The Finance (No. 2) Bill is a matter of great constitutional as well as financial and economic consequence. I do not go so far as to say that it has been a privilege to sit through every debate. However, the Bill is important, because it is the means by which the House grants Supply. This year, that will amount to about £62 billion in revenue. It therefore stands at the heart of parliamentary control. It embodies the Government's concepts of economic justice as well as their view of the course of the economy and the measures needed to manage it.
This year, as I listened to every debate and argument—and I enjoyed many of them—I became conscious of the fact that the Bill was irrelevant—irrelevant to the crushing problems of inflation, social dereliction and industrial collapse that rage through this country. There seems to be very little in the Bill that seeks to remedy these afflictions and very little to give hope to the growing number of unemployed.
This arises partly from the way in which the Budget Statement was constructed. Many of the most important policies enunciated in the Budget Statement were not in the Bill at all. The policies embodied in the public expenditure White Paper must be considered alongside the measures set out in the Finance Bill.
In this Bill there are some tiny measures to help small businesses, so small in fact that they are unrecordable in the national accounts. For example, there are tax reliefs on the cost of setting up a new business. But in the public expenditure White Paper, Government aid to industry was cut by £1·2 billion, or 45 per cent., and much of that aid was aimed at the small business sector. For example, the sectoral schemes of assis-

tance were aimed specifically at small manufacturing businesses. Therefore, for every penny given to the small business in the Finance Bill, £1 was taken away by the public expenditure White Paper. It is no wonder that company liquidations are at a post-war record level.
In addition, many of the policies in the Budget Statement were enacted in the Social Security (No. 2) Bill. Tax reliefs for the well-off in the Finance Bill—the £70 million relief from capital gains tax, which the Chief Secretary described as "wholly appropriate and socially just" and the £125 million relief in capital transfer tax—must be seen in the context of the wholly inappropriate and socially unjust cuts in the social security provisions. For example, we have the de-indexation of short-term national insurance benefits for sickness, injury, maternity and unemployment at a saving of £140 million. That was the first reduction in unemployment benefit in this country for 50 years. We have also seen the phasing out of the earnings-related supplement, saving about £300 million. Therefore, tax reliefs and reductions in benefit must be considered together. When we do this, we see a picture of economic injustice.
The significance of the Bill pales somewhat when one considers it alongside what is being done to industry by public expenditure cuts and to the poor by social security legislation. We must ask ourselves what relevance the Bill has to an economy in which there are 1.6 million people unemployed—and that figure will probably be 1.8 million when the July figures come out and 2 million by the autumn. At the same time, inflation is running at 20 per cent. and industry is being crushed by high interest rates. For a start, the Finance Bill adds one point to the retail price index.
However, the Bill includes an enterprise package,. I pricked my ears up when I heard the Chancellor announce that there was to be an enterprise package, because I thought that was a good idea. When I spoke during the Committee stage on the Floor of the House on 3 June, I drew attention to 235,000 redundancies that had been announced to that date. That very day Lucas Industries announced another 2,500 redundancies. Since 3 June the figure has risen to 275,000 and at present redundancies


are growing at the rate of 40,000 a month. We are entitled to ask what relevance the enterprise package has to that problem.
In introducing his Budget Statement the Chancellor said that it embodied measures to arrest Britain's economic decline, mainly by promoting private endeavour. Private endeavour is encouraged in this Bill by a succession of small tax reliefs to businesses, such as that in clause 36 relating to relief for losses on unquoted trading companies. The Chief Secretary told us that that concession would ultimately be of real importance in the financing of small businesses. However, he qualified that when he said
The advantages of such measure will become apparent only once inflation and domestic interest rates are abated."—[Official Report, 8 May 1980; Vol. 984, c. 555.]
We have absolutely no doubt that that is true.
Then we have the enterprise zones, and we await with interest the results of those. The Financial Secretary summed up this area of Government policy in his usual silver-tongued way by saying:
The approach that is embodied in the clause is that of 'Suck it and see'. It is not as such a doctrine of the Government. It is what lies behind the concept of an experiment …"—[Official Report, 4 June 1980; Vol. 985, c. 1513.]
That sounds an extremely tentative approach to industrial and economic regeneration. The £25 million to £30 million being spent on enterprise zones is as nothing compared with the damage being done to business by inflation, high interest rates and cuts in public expenditure. Business has been given hardly anything of value in the Bill.
When we come to personal taxation, the injustice of the Bill becomes fully apparent. Ministers continually tell us that it will take 1·3 million people out of taxation. We all know that they will be back again within six to nine months at the present rate of inflation. The net effect of the income tax changes was to reduce the tax bill of a married couple on £40 a week by 55p a week, a married couple on £250 a week by £3·50 and a married couple on £500 a week by £10·20. About 40,000 families ended up in a deeper poverty trap than before. Any-

one who is married with two children, and who earns under £15,000 a year, is worse off as a result of the Budget of which this Finance Bill is part.
In the course of considering the Bill we sought to give relief from taxation to the poorest by increasing the 25p rate band of income tax to £1,000. We argued that if it was the Government's intention, as they tell us, to reduce the standard rate to 25p in the lifetime of this Parliament, the way to do it was to extend gradually the reduced rate band and not to abolish it. The abolition of that band disadvantaged 3½ million people, including 1 million who were over 60, 1½ million working wives, and 300,000 adult males on low wages. Such a change was unjustifiable and clearly unjust.
We have frequently pointed out that more revenues could be raised from those enterprises that have gained windfall profits from high interest rates and the rise in the value of crude oil—banks and oil companies. Nothing was done at all about bank profits. We had an interesting little debate. With his usual mellifluousness, the Financial Secretary said:
There is no doubt that part of the profits represents a windfall for the banks. This windfall element is not a sign of the clearers' enterprise or of their efficiency. Nor, of course, is it a sign of exploitation, it is merely adventitious…These windfall profits can, however, be regarded in part as a by-product of the Government's determination to root out inflation by monetary policy…I accept in principle that there could be a case for the special taxation of the part of bank profits resulting from high interest rates. It is undoubtedly true that there is an element of quasi-monopoly in the clearers' position.
After several more minutes of such weasel words, the Financial Secretary said that the case had not been made out for a tax on bank profits. Bank profits this year came to £1·5 billion.
We also showed that the adventitious profits of the oil companies had been inadequately taxed. All informed comment from oil industry observers has made the point that the increase in petroleum revenue tax in this Bill will hardly affect oil company profits. The international oil companies are using their windfall profits to diversify into electronics, mining, departmental stores and other unrelated business, which public services are being cut for lack of revenue.
We proposed that the advance payment of PRT should be raised to 25 per cent., since it was clear that the 15 per cent. advance payment had been picked by the Government completely out of the air. Our proposal would have raised a further £120 million of revenue. On no grounds at all, the Government once again came down on the side of the oil companies.
A debate that we initiated on the use of North Sea oil revenues provoked no sensible response from the Government. The Minister of State attempted to demonstrate that even to discuss such a matter on clause stand part was out of order. They said nothing about what is one of the greatest economic issues of our time. It is clear that oil revenues over the next three or four years will be at least double the Government forecast, yet we have no open discussion of their use. These oil revenues are hidden away in the national accounts as what are quaintly called fiscal adjustments—presumably tax reliefs for the next election.
I return to the question of the relevance of this Bill to the economic and industrial problems of this country. The Chancellor concluded his Budget Statement on 26 March with the following words:
we have ended the 1970s with a society that is becoming less tolerant because we live with an economy that has been growing no richer. The 1980s can be very different"—[Official Report, 26 March 1980; Vol. 980, c. 1489.]
That is true, but how does the Bill and the economic policy of which it is part help us to become richer and more tolerant? It is hard to find much assurance in the 119 clauses and 20 schedules of the Bill. As an article in the Financial Times of 1 July asked:
how much unemployment can Britain stand before the social fabric begins to collapse? This is the main question that Ministers should be asking themselves.
The Government's strategy may eventually reduce inflation, but it will certainly not replace the production lost within the lifetime of this Parliament. It is likely to take unemployment up to the 3 million mark during this Parliament—and the Secretary of State for Industry tells us that that increase is inevitable.
Against that background, all the talk of the enterprise package in the Bill, and pulling ourselves up by private endeavour is claptrap. The Chief Secretary said that the advantages of these measures will become apparent when inflation and domestic interest rates have abated. That abatement may come, but it is taking a long time, and meanwhile this country is faced with industrial collapse.
Every day the great grey army of the unemployed grows larger and we are producing a generation of young people without work. The Bill is irrelevant to the basic problems of this country, and I ask my right hon. Friends to vote against the Third Reading.

The Chief Secretary to the Treasury (Mr. John Biffen): It is my task to commend to the House the Third Reading of the Bill, which has had a useful and good-natured debate over the past couple of hours.
My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) thought that this would be an historic Finance Bill. That is a generous judgment. Every Finance Bill has an almost instant reaction, the measured judgment that comes at this stage of the parliamentary proceedings, and a more valid judgment that can be made only in the fulness of time when its propositions can be related to the economic circumstances and requirements of the society.
I welcome the confidence expressed by my hon. Friend the Member for Lichfield and Tamworth and I believe that his instinctive judgment will be validated. Of course, the final say will rest with the British electorate. The House has been long on rhetoric, but many of the attitudes that have been struck—such as the easy assertion that we are facing industrial collapse—can be judged only when the issue is taken to a wider audience and we talk not merely to each other and to our friends in Fleet Street. The hon. Member for Norwich, South (Mr. Garrett) may be short of friends in Fleet Street.

Sir William Clark: The hon. Gentleman is short of friends anywhere.

Mr. Biffen: I would not be so uncharitable as to suggest that. I found the


hon. Gentleman a delightful combatant in Committee.
I make the more modest assertion that, whatever the Bill may or may not do for the economic life of this nation, it is not a monument to great fiscal innovation—and it is none the worse for that. I have suffered more from reformers than from any other section of the community while I have been in Parliament.
The Bill has clearly provided the Opposition with an occasion for indulgence in a high-profile, ideological controversy. We should not be surprised at that, because it is well known that, if one has difficulties at home, one should seek external diversions. We all know the difficulties that the Labour Party is having at home.
The Bill has been singled out for the most lurid language. The right hon. Member for Llanelli (Mr. Davies), who is at most a good-natured contemporary edition of Lloyd-George, felt constrained to argue that the Bill was a fee paid by the Conservative Party to property, privilege and influence. I had not realised that such a devastating weapon had been entrusted to me when I was asked to do what I could to see the Bill pass its parliamentary stages. The hon. Member for Clack-mannan and East Stirlingshire (Mr. O'Neill) also had fairly harsh things to say. I put diffidently, perhaps, a more modest interpretation of what this Finance Bill sets out to do.
There are four themes that might be attached to the Bill. First, it provides, essentially through parts I and III, for a revenue of £62,000 million. That is a massive sum. As table 9 of the Red Book indicates, receipts from taxation are rising at a time when the public sector borrowing requirement is expected to fall. I say, perhaps as much to my hon. Friends as to other parts of the House, that we are confronted in this Bill with the truth that realistic taxation is needed to enable monetary policy to function without undue recourse to Government borrowing.
I listened with particular interest to the contribution of the hon. Member for Colne Valley (Mr. Wainwright). I thought that he was not entirely unsympathetic to the belief that, in whatever pursuit we will have of the Government's total

economic objectives, it is foolish to suppose that we can proceed without realistic levels of taxation. That is precisely what is being provided for in the Bill. Of course, we proceed on that perhaps puritanical path only at the distraction of the official Opposition.
The hon. Member for Sheffield, Heeley (Mr. Hooley) did the House a service when he reminded us of the anxiety of Labour Members through their official amendments to reduce value added tax by a substantial amount in opting for a 12½ per cent. rate and by seeking to alter the personal income tax allowances by measures that would have cost £640 million in a full year. Whatever view one may take of the niceties of fine tuning of the borrowing requirement, I frankly do not see how one can conceive of tax changes of that order of magnitude without moving into fiscal irresponsibility. That was precisely the point made by my hon. Friend the Member for Lough-borough (Mr. Dorrell), whose comments I welcome in that respect.
Secondly as a theme, I would draw the attention of the House to the fact that the Bill, through clauses 1 to 3, encompasses substantial increases in excise duties on alcohol, tobacco and petrol.

Sir William Clark: Not enough.

Mr. Biffen: My hon. Friend the Member for Croydon, South (Sir W. Clark) says "Not enough". I am coming to that point. The balance of taxation between direct and indirect will always be a matter for political judgment in the House. Having heard the debates that have attended the Bill since the Budget debate itself, I can only observe that while I cannot speculate on future patterns of taxation, I have noted that in many parts of the House there is a view that the taxable capacities of excise duties have not been exhausted. I perhaps may rest with those Delphic words.
In the whole balance of taxation that one is constantly seeking between direct and indirect and the other elements of society that will have to bear them, I thought that my hon. Friend the Member for Renfrewshire, East (Mr. Stewart) made a helpful contribution in arguing the importance of seeking to minimise the impact of taxation upon the corporate sector as and when additional resources


became available. I understand that he was talking very much in terms of the North Sea revenues. I contrast that with the unseemly populist language of the hon. Member for Colne Valley who said that God gave the oil to the people. He seemed to imply that he meant people in a popular sense in terms of scope for personal tax reductions as opposed to corporate tax reductions. I hope that he will assure me that he has an open mind on the issue.

Mr. Richard Wainwright: Surely the Chief Secretary is aware that in making my remarks about an hour ago I credited him with understanding the Book of Deuteronomy.

Mr. Biffen: That is a valid point. However, there is nothing in the Finance Bill about the Book of Deuteronomy. I am here concerned not with trouble but with order. The rules of order covering a Third Reading debate state that I must confine myself to what is in the Bill, not to what might be in it. Tempted as I am to engage in Old Testament reminiscences, which are particularly suitable for the one Gladstonian relic in the Liberal Party, the hon. Gentleman will understand that this evening is not the correct occasion.
I turn to my third theme. As my hon. Friend the Member for Hertfordshire, South-West (Mr. Page) said, the Bill contains modest but useful aids for the small business community and a variety of clauses. Clause 28 provides relief for interest on money borrowed for investment in a close company. Relief for losses on unquoted shares in trading companies is contained in clause 37. Alterations to capital transfer tax are made in clause 84.
My hon. Friend the Member for Winchester (Mr. Browne) was eloquent on the importance of Government sowing in order to reap through taxation changes. None of us can put hand on heart and say what will happen to the smaller business sector of the economy as a result of the changes. None of us can harm ourselves or Parliament's reputation if we are modest in what we claim to be the consequence of the changes.
The hon. Member for Heeley is unfair to himself and to the Government when he says that the measures encourage Poujadistes. The measures will cer-

tainly play a part in trying to secure a wider and more productive and profitable employment base. That means that one cannot create jobs other than on the basis of profitable companies. Inasmuch as the tax changes for the small companies help to create that profitability they will have some impact and consequence on unemployment.
To speak of property, privilege and influence in the context of these clauses—and I imagine that the right hon. Member for Llanelli had them in mind—is a travesty of the real motivation of the people concerned. Above all, it reveals a lack of understanding about where in today's society corporate privilege and influence is concentrated. It is not in the type of people who will be advantaged by the provisions.
That brings me to my fourth and final theme. The theme has not featured in the Third Reading debate, but we discussed it earlier. I refer to the tangible gesture made to charities in the measures contained in clauses 53 to 55, to the capital transfer tax exemption in clause 85 and the development land exemption in clause 108. It is the belief of my side of the House that it is wholly legitimate to welcome partnership between the State and private provision in the spheres of medicine, the heritage and social welfare. We believe that that objective will be furthered by the Bill. I suspect that this as much as anything will ultimately be seen to be the monument of the Bill.
What has been undertaken in those clauses marks a significant departure after a period during which this whole issue has lain dormant in terms of fiscal consideration. But, having said that, and having asserted my strong support and endorsement of these measures, I remind the House that any moves which involve tax exemptions necessarily erode the tax base. That is one continuing consideration for all those who are committed to the ultimate objective of lower basic rates of taxation. Constant erosion of the tax base must run counter to that overriding objective.
As the hon. Member for Norwich, South (Mr. Garrett) said, we come to the end of the consideration in this House of the Bill. It is a Bill of great constitutional significance. I endorse what he said on that count. It will go to the other place


where, happily, it can be neither embellished nor desecrated, thanks to the wise provisions—I must say this to mend my bridges with Deuteronomy—by which Lloyd George, and may his memory long be hallowed in this place, ensured that we rather than the Duke of Norfolk have the last say upon measures of considerable fiscal significance.
This Bill deserves to leave the Com-

mons with the good will of all who take a realistic view of the economy and the need for levels of taxation essential to reduce deficit financing. Let us send it on its passage with good will and gainsay any who may try to impede it.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 276, Noes 213.

Division No. 410]
AYES
[9.40 pm


Adley, Robert
Dunn, Robert (Dart[...]ord)
King, Rt Hon Tom


Aitken, Jonathan
Durant, Tony
Knight, Mrs Jill


Alexander, Richard
Dykes, Hugh
Knox, David


Alison, Michael
Eggar, Timothy
Lang, Ian


Ancram, Michael
Elliott, Sir William
Latham, Michael


Arnold, Tom
Emery, Peter
Lawrence, Ivan


Atkins, Robert (Preston North)
Eyre, Reginald
Lawson, Nigel


Atkinson, David (B'mouth, East)
Fairgrieve, Russell
Lee, John


Baker, Kenneth (St. Marylebone)
Faith, Mrs Sheila
Lennox-Boyd, Hon Mark


Baker, Nicholas (North Dorset)
Farr, John
Lester, Jim (Beeston)


Bell, Sir Ronald
Fenner, Mrs Peggy
Lewis, Kenneth (Rutland)


Bendall, Vivian
Fisher, Sir Nigel
Lloyd, Peter (Fareham)


Benyon, Thomas (Abingdon)
Fletcher, Alexander (Edinburgh N)
Loveridge, John


Benyon, W. (Buckingham)
Fletcher-Cooke, Charles
Luce, Richard


Bevan, David Gilroy
Fookes, Miss Janet
Macfarlane, Neil


Biffen, Rt Hon John
Forman, Nigel
MacGregor, John


Blackburn, John
Fowler, Rt Hon Norman
MacKay, John (Argyll)


Blaker, Peter
Fraser, Rt Hon H. (Stafford &amp; St)
Macmillan, Rt Hon M. (Farnham)


Bo[...], Richard
Fraser, Peter (South Angus)
McNair-Wilson, Michael (Newbury)


Bonsor, Sir Nicholas
Fry, Peter
McNair-Wilson, Patrick (New Forest)


Boscawen, Hon Robert
Gardiner, George (Reigate)
McQuarrie, Albert


Bottomley, Peter (Woolwich West)
Gardner, Edward (South Fylde)
Madel, David


Bowden, Andrew
Garel-Jones, Tristan
Major, John


Boyson, Dr. Rhodes
Gilmour, Rt Hon Sir Ian
Marland, Paul


Braine, Sir Bernard
Glyn, Dr Alan
Marshall, Michael (Arundel)


Bright, Graham
Goodlad, Alastair
Mather, Carol


Brinton, Tim
Grant, Anthony (Harrow C)
Maude, Rt Hon Angus


Brittan, Leon
Gray, Hamish
Mawby, Ray


Brocklebank-Fowler, Christopher
Grieve, Percy
Mawhinney, Dr Brian


Brooke, Hon Peter
Griffiths, Eldon (Bury St Edmunds)
Maxwell-Hyslop, Robin


Brotherton, Michael
Griffiths, Peter (Portsmouth N)
Mayhew, Patrick


Brown, Michael (Brigg &amp; Sc'thorpe)
Grist, Ian
Meyer, Sir Anthony


Browne, John (Wincheser)
Grylls, Michael
Mills, Iain (Meriden)


Bruce-Gardyne, John
Gummer, John Selwyn
Mills, Peter (West Devon)


Bryan, Sir Paul
Hamilton, Hon Archie (Eps'm&amp;Ew'll)
Miscampbell, Norman


Buchanan-Smith, Hon Alick
Hamilton, Michael (Salisbury)
Mitchell, David (Basingstoke)


Buck, Antony
Hampson, Dr Keith
Moate, Roger


Budgen, Nick
Hannam, John
Molyneaux, James


Bulmer, Esmond
Haselhurst, Alan
Montgomery, Fergus


Burden, F. A.
Havers, Rt Hon Sir Michael
Moore, John


Butcher, John
Hawkins, Paul
Morris, Michael (Northampton, Sth)


Butler, Hon Adam
Hawksley, Warren
Morrison, Hon Charles (Devizes)


Carlisle, John (Luton West)
Hayhoe, Barney
Morrison, Hon Peter (City of Chester)


Carlisle, Kenneth (Lincoln)
Heath, Rt Hon Edward
Mudd, David


Carlisle, Rt. Hon Mark (Runcorn)
Heddle, John
Murphy, Christopher


Chalker, Mrs. Lynda
Henderson, Barry
Myles, David


Channon, Paul
Heseltine, Rt Hon Michael
Neale, Gerrard


Chapman, Sydney
Hicks, Robert
Needham, Richard


Churchill, W. S.
Higgins, Rt Hon Terence L.
Nelson, Anthony


Clark, Hon Alan (Plymouth, Sutton)
Hill, James
Neubert, Michael


Clark, Sir William (Croydon South)
Holland, Philip (Carlton)
Newton, Tony


Clarke, Kenneth (Rushcliffe)
Hooson, Tom
Normanton, Tom


Clegg, Sir Walter
Hordern, Peter
Oppenheim, Rt Hon Mrs Sally


Cope, John
Howe, Rt Hon Sir Geoffrey
Osborn, John


Cormack, Patrick
Howell, Rt Hon David (Guildford)
Page, John (Harrow, West)


Corrie, John
Howell, Ralph (North Norfolk)
Page, Rt Hon Sir R. Graham


Costain, A. P.
Hunt, David (Wirral)
Page, Richard (SW Hertfordshire)


Cranborne, Viscount
Hunt, John (Ravensbourne)
Parkinson, Cecil


Critchley, Julian
Irving, Charles (Cheltenham)
Parris, Matthew


Dean, Paul (North Somerset)
Jenkin, Rt Hon Patrick
Patten, Christopher (Bath)


Dickens, Geoffrey
Johnson Smith, Geoffrey
Patten, John (Oxford)


Dorrell, Stephen
Jopling, Rt Hon Michael
Pattie, Geoffrey


Douglas-Hamilton, Lord James
Kaberry, Sir Donald
Pawsey, James


Dover, De[...]shore
Kellett-Bowman, Mrs Elaine
Percival, Sir Ian


du Cann, Rt Hon Edward
Kershaw, Anthony
Pink, R. Bonner


Dunlop, John
Kimball, Marcus
Pollock, Alexander




Porter, George
Speed, Keith
van-Straubenzee, W. R.


Prentice, Rt Hon Reg
Spence, John
Vaughan, Dr Gerard


Price, David (Eastleigh)
Spicer, Jim (West Dorset)
Viggers, Peter


Proctor, K. Harvey
Spicer, Michael (S Worcestershire)
Waddington, David


Pym, Rt Hon Francis
Sproat, Iain
Wakeham, John


Raison, Timothy
Squire, Robin
Waldegrave, Hon William


Rathbone, Tim
Stainton, Keith
Walker, Rt Hon Peter (Worcester)


Rees, Peter (Dover and Deal)
Stanbrook, Ivor
Walker, Bill (Perth &amp; E Perthshire)


Rees-Davies, W. R.
Stanley, John
Walker-Smith, Rt Hon Sir Derek


Renton, Tim
Steen, Anthony
Waller, Gary


Rhodes James, Robert
Stevens, Martin
Walters, Dennis


Ridley, Hon Nicholas
Stewart, Ian (Hitchin)
Ward, John


Ridsdale, Julian
Stewart, John (East Renfrewshire)
Warren, Kenneth


Rifkind, Malcolm
Stokes, John
Wells, John (Maidstone)


Roberts, Michael (Cardif[...] NW)
Stradling Thomas, J.
Wheeler, John


Roberts, Wyn (Conway)
Tapsell, Peter
Whitney, Raymond


Ross, Wm. (Londonderry)
Taylor, Robert (Croydon NW)
Wickenden, Keith


Sainsbury, Hon Timothy
Taylor, Teddy (Southend East)
Wiggin, Jerry


Scott, Nicholas
Tebbit, Norman
Wilkinson, John


Shaw, Giles (Pudsey)
Temple-Morris, Peter
Williams, Delwyn (Montgomery)


Shaw, Michael (Scarborough)
Thomas, Rt Hon. Peter (Hendon S)
Winterton, Nicholas


Shelton, William (Streatham)
Thompson, Donald
Wolfson, Mark


Shepherd, Colin (Hereford)
Thorne, Neil (Ilford South)
Young, Sir George (Acton)


Shepherd, Richard (Aldridge-Br'hills)
Thornton, Malcolm



Shersby, Michael
Townsend, Cyril D. (Bexleyheath)
TELLERS FOR THE AYES


Silvester, Fred
Trippier, David
Mr. Spencer Le Marchant and


Sims, Roger
Trotter, Neville
Mr. Mr. Anthony Berry.


Smith, Dudley (War. and Leam'ton)




NOES


Adams, Allen
Dubs, Alfred
Kerr, Russell


Alton, David
Duffy, A. E. P.
Kilfedder, James A.


Anderson, Donald
Dunn, James A. (Liverpool, Kirkdale)
Kilroy-Silk, Robert


Archer, Rt Hon Peter
Dunnett, Jack
Lamble, David


Armstrong, Rt Hon Ernest
Dunwoody, Mrs Gwyneth
Leighton, Ronald


Ashley, Rt Hon Jack
Eadie, Alex
Lewis, Arthur (Newham North West)


Ashton, Joe
Eastham, Ken
Lewis, Ron (Carlisle)


Atkinson, Norman (H'gey, Tott'ham)
Edwards, Robert (Wolv SE)
Litherland, Robert


Bagier, Gordon A. T.
Ellis, Raymond (NE Derbyshire)
Lofthouse, Geoffrey


Barnett, Guy (Greenwich)
Ellis, Tom (Wrexham)
Lyon, Alexander (York)


Barnett, Rt Hon Joel (Heywood)
English, Michael
Lyons, Edward (Bradford West)


Beith, A. J.
Evans, Ioan (Aberdare)
McDonald, Dr Oonagh


Bidwell, Sydney
Evans, John (Newton)
McElhone, Frank


Booth, Rt Hon Albert
Faulds, Andrew
McKelvey, William


Boothroyd, Miss Betty
Field, Frank
MacKenzie, Rt Hon Gregor


Bottomley, Rt Hon Arthur (M'brough)
Fitch, Alan
Maclennan, Robert


Bradley, Tom
Flannery, Martin
McTaggart, Bob


Bray, Dr Jeremy
Fletcher, L. R. (Ilkeston)
McWilllam, John


Brown, Hugh D. (Provan)
Fletcher, Ted (Darlington)
Magee, Bryan


Brown, Robert C. (Newcastle W)
Foot, Rt Hon Michael
Marshall, David (Gl'sgow, Shettles'n)


Brown, Ronald W. (Hackney S)
Ford, Ben
Marshall, Dr Edmund (Goole)


Brown, Ron (Edinburgh, Leith)
Forrester, John
Marshall, Jim (Leicester South)


Buchan, Norman
Foster, Derek
Martin, Michael (Gl'gow, Springb'rn)


Callaghan, Rt Hon J. (Cardiff SE)
Fraser, John (Lambeth, Norwood)
Mason, Rt Hon Roy


Callaghan, Jim (Middleton &amp; P)
Freeson, Rt Hon Reginald
Maynard, Miss Joan


Campbell, Ian
Garrett, John (Norwich S)
Meacher, Michael


Campbell-Savours, Dale
Garrett, W. E. (Wallsend)
Mellish, Rt Hon Robert


Cant, R. B.
Ginsburg, David
Mikardo, Ian


Carm'ch[...], Neil
Graham, Ted
Millan, Rt Hon Bruce


Carter-Jones, Lewis
Grant, George (Morpeth)
Miller, Dr M. S. (East Kilbride)


Clark, Dr. David (South Shields)
Grant, John (Islington C)
Mitchell, Austin (Grimsby)


Cocks, Rt Hon Michael (Bristol S)
Hamilton, James (Bothwell)
Mitchell, R. C. (Soton, Itchen)


Cohen, Stanley
Hamilton, W. W. (Central Fife)
Morris, Rt Hon Alfred (Wythenshawe)


Coleman, Donald
Hardy, Peter
Morris, Rt Hon Charles (Openshaw)


Cook, Robin F.
Harrison, Rt Hon Walter
Morris, Rt Hon John (Aberavon)


Cowans, Harry
Hart, Rt Hon Dame Judith
Moyle, Rt Hon Roland


Crowther, J. S.
Hattersley, Rt Hon Roy
Newens, Stanley


Cryer, Bob
Haynes, Frank
Oakes, Rt Hon Gordon


Cunliffe, Lawrence
Heffer, Eric S.
Ogden, Eric


Cunningham, Dr John (Whitenaven)
Hogg, Norman (E Dunbartonshire)
O'Halloran, Michael


Dalyell, Tam
Holland, Stuart (L'beth, Vauxhall)
O'Neill, Martin


Davidson, Arthur
Home Robertson, John
Orme, Rt Hon Stanley


Davies, Rt Hon Denzil (Llanelli)
Homewood, William
Owen, Rt Hon Dr David


Davies, Ifor (Gower)
Hooley, Frank
Parker, John


Davis, Clinton (Hackney Central)
Horam, John
Parry, Robert


Davis, Terry (B'rm'ham, Stechford)
Howell, Rt Hon Denis (B'ham, Sm H)
Pavitt, Laurie


Deakins, Eric
Hughes, Mark (Durham)
Pendry, Tom


Dempsey, James
Hughes, Robert (Aberdeen North)
Powell, Raymond (Ogmore)


Dewar, Donald
Janner, Hon Greville
Prescott, John


Dixon, Donald
Jay, Rt Hon Douglas
Price, Christopher (Lewisham West)


Dobson, Frank
John, Brynmor
Race, Reg


Dormand, Jack
Jones, Rt Hon Alec (Rhondda)
Radice, Giles


Douglas, Dick
Jones, Barry (East Flint)
Richardson, Jo


Douglas-Mann, Bruce
Jones, Dan (Burnley)
Roberts, Allan (Bootle)






Roberts, Gwilym (Cannock)
Soley, Clive
Weetch, Ken


Robertson, George
Stallard, A. W.
Wellbeloved, James


Robinson, Geoffrey (Coventry NW)
Steel, Rt Hon David
Welsh, Michael


Rooker, J. W.
Stoddart, David
White, Frank R. (Bury &amp; Radcliffe)


Roper, John
Stott, Roger
White, James (Glasgow, Pollok)


Ross, Ernest (Dundee West)
Strang, Gavin
Whitehead, Phillip


Ross, Stephen (Isle of Wight)
Straw, Jack
Whitlock, William


Rowlands, Ted
Summerskill, Hon Dr Shirley
Willey, Rt Hon Frederick


Ryman, John
Thomas, Jeffrey (Abertillery)
Williams, Rt Hon Alan (Swansea W)


Sandelson, Neville
Thomas, Dr Roger (Carmarthen)
Williams, Sir Thomas (Warrington)


Sheerman, Barry
Tilley, John
Wilson, Gordon (Dundee East)


Sheldon, Rt Hon Robert (A'ton-u-L)
Tinn, James
Winnick, David


Shore, Rt Hon Peter (Step and Pop)
Torney, Tom
Woolmer, Kenneth


Silkin, Rt Hon John (Deptford)
Urwin, Rt Hon Tom
Wright, Sheila


Silkin, Rt Hon S. C. (Dulwich)
Varley, Rt Hon Eric G.



Silverman, Julius
Wainwright, Richard (Colne Valley)
TELLERS FOR THE NOES:


Skinner, Dennis
Walker, Rt Hon Harold (Doncaster)
Mr. Hugh McCartney and


Smith, Rt Hon J. (North Lanarkshire)
Watkins, David
Mr. George Morton.


Snape, Peter

Question accordingly agreed to.

Bill read the Third time and passed.

Orders of the Day — SCOTTISH SPECIAL HOUSING ASSOCIATION (MODERNISATION SCHEMES)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]

Mr. John Smith: The purpose of this Adjournment debate is to raise a serious problem which affects some of my constituents and which results from the Government's public expenditure cuts, which have affected the programme of the Scottish Special Housing Association, particularly with regard to its modernisation schemes.
In my constituency, in the village of Newarthill, there are 52 Atholl steel houses, which were to be modernised as part of the modernisation programme of the SSHA. The modernisation was due to start in April this year. A number of houses in the same area have already been modernised under a previous scheme of the association. The tenants confidently expected that work on their houses, which are greatly in need of modernisation, would be started in April this year, but in March they were informed by the association that the modernisation programme would not take place. They were also told that the programme would be deferred at least until April 1981 and that the association could give no date when a start could take place.
The tenants asked the reason for this sudden change of policy. The association explained that it was because the Government had reduced the capital alloca-

tion for the SSHA by 20 per cent. and that serious cuts had had to be made in all the modernisation schemes, or the schemes had had to be revised.
Of this type of house—there are almost 2,000 in Scotland—about 348 have been modernised. About 500 are in the course of being modernised, and there are still about 1,100 to be dealt with. Of that 1,100, in excess of 500 are to be tackled in seven schemes. The houses in my constituency are included in one of those schemes.
It is not surprising that the tenants in those houses are angry and frustrated. They have voiced that anger and frustration to me in no uncertain terms. I have pursued the matter with the association, and I have corresponded with the Minister. But it is clear that the main reason for this and other schemes throughout central Scotland not being proceeded with is a deliberate act of Government policy, and a cut in public expenditure on housing for Scotland.
It means also that tenants such as those in my constituency and the constituencies of other hon. Members will have for the foreseeable future to live in houses that are totally out of date because the Scottish Special Housing Association cannot give them a date for the starting of the repairs. Indeed, so abrupt has been the halt that in some cases contracts had been issued for some of the work that was to be done.
Apart from the very serious injustice that will be caused by the effects of the Government's policy, it will have consequences of an economic character, because some of the houses will require essential repairs so that people can live in them. The association will therefore have to do bits and pieces of repairs to keep the houses wind and watertight,


and that cannot be economic on any sensible basis.
The real villains of the piece are the Government, who have deliberately cut the public expenditure provision for houses, not only for local authorities but for the Scottish Special Housing Association as well. But more serious than I thought when I applied for this Adjournment debate is the position that was revealed today in the columns of The Scotsman, which quotes from a private report made by the Scottish Special Housing Association on the effects on its budget of Government policy. It appears from the report that the capital budget is not just chopped by 20 per cent. but that over the next three or four years it will be cut from £42 million at present by a factor of 40 per cent. in total, so that the Scottish Special Housing Association will be able to undertake the Glasgow eastern area renewal project—GEAR, as it is called—and little else. It will not be able to help any of the schemes in any other parts of the country, and it will end up by merely being the landlord of the houses which it has already built. Indeed, as I am reminded, it will be encouraged to dispose of the stock which it already has.
I ask the Minister to tell the House what he has been communicating to the Scottish Special Housing Association as to its future building programme and the future financial allocation. If the report in The Scotsman is correct, it reveals a quite scandalous state of affairs. If the Minister denies the accuracy of the report, he will no doubt tell us what he has said to the Scottish Special Housing Association and what will be available to it for capital and revenue spending in the next three of four years. I suspect that the reports in the newspaper are correct and that the Scottish Special Housing Association is facing not only a serious financial problem but that its very scope will be limited over the next three or four years.
The Scottish Special Housing Association has played a unique role in the development of housing policy in the United Kingdom. In England and Wales there is no such institution, and it has been to the benefit of Scotland that we have had an association, funded by the central Government, which has been able to supplement local authority house-

building programmes and in particular has been able to help the programmes of economic development.
This is now put seriously at risk by the Government's financial cuts, which will have very serious and unfortunate consequences for my constituents and the constituents of my hon. Friends. Modernisation schemes will be affected by these cutbacks, and people cannot be told when the improvements will take place. Even more serious, the whole future of the organisation seems to be in doubt as the result of the deliberate policy of this unfortunate Government.

Mr. Peter Fraser: I have listened with great interest to what the right hon. Member for Lanarkshire, North (Mr. Smith) said about the Scottish Special Housing Association. As he has rightly said, for a considerable period now in Scotland the SSHA has enjoyed a very important role. It will be admitted on each side of the House that it has performed a very valuable function, not only in the west central belt of Scotland but throughout Scotland as a whole.
As the right hon. Gentleman has already indicated, the Government have introduced a fairly substantial level of cuts in the budget of the SSHA, but the cuts require to be put in context. For more than five years there has been a downward trend in the expenditure on housing in Scotland.
There is no need for me to rehearse the reasons why the Government consider it necessary to make these cuts in public expenditure. In that context, it is important to assert and to consider where priorities in housing expenditure should lie. There have been cuts in the SSHA's budget, but it is important to consider where expenditure on housing in Scotland is being maintained.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]

Mr. Fraser: It is important to look at expenditure on the SSHA in the wider context of expenditure on housing in Scotland as a whole. We have seen the


continuance of expenditure on housing associations more generally, not on the SSHA in particular. Where that expenditure is being allowed, in our tight economic difficulties, is right. It is a relatively young movement and is able to provide the housing that is most important in Scotland.
I should have thought that all Scottish Members were well aware that of the greatest importance in housing is the provision of houses of limited size of two or three apartments in renovated and restored city centre properties. I believe that the housing associations, which have been particularly effective in performing that role, should be given the opportunity to continue it.
I understand why the right hon. Gentleman should be concerned about the specific instance that he has put before the House. I have to accept that there is a tight limitation on expenditure on housing. If there has to be a priority for that expenditure, I prefer to see it go to housing associations rather than to the SSHA.

Mr. Gregor MacKenzie: The hon. Gentleman made the point that this is a comparatively new organisation. I believe that he is thinking purely in terms of the housing stock built and owned by the Scottish Special Housing Association. I am sure that he is aware that the SSHA took over many older houses from the previous association, most of which were badly in need of modernisation. That was the complaint that was voiced by my right hon. Friend the Member for Lanarkshire, North (Mr. Smith). Many of these houses are in steel areas, which are being badly hit, and there is a great need for improving the environment. That is the question to which we are asking the Government to address themselves.

Mr. Fraser: I accept the right hon. Gentleman's point to the extent that if a priority has to be asserted, it should be in the modernisation and improvement of the existing housing stock. If I have to assert a priority, it is that we should not continue building on a large scale on the outskirts of towns.
I have experience of the effects of the cutbacks in the SSHA's budget in my constituency. I accept that it is a diffi-

cult decision, and personally it will not be easy to face. However, there are difficulties. I recognise that my hon. Friend has to make cuts in expenditure. What he has done and the priorities that he has established seem to me to be broadly correct.
The right hon. Member for Lanarkshire, North has difficulties within his constituency, but I recognise that there will be anomalies throughout Scotland. If we have a tight limitation on what we spend, our priorities should lie in the provision of sheltered housing and small units of accommodation for the elderly and so on in our city centres and elsewhere.

Mr. Michael Martin: (Glasgow, Spring-burn): Less than two years ago Glasgow district council agreed that the Scottish Special Housing Association should take over several hundred of its houses for the purpose of modernisation. Many of the houses were what is known as nontraditional houses, built just after the war when traditional materials were difficult to obtain.
In my constituency there are 250 houses known as BISF houses and 300 Orlett houses. The tenants welcomed the SSHA because they wanted modernisation not simply for their comfort but because they believed that the houses were dangerous. The cladding of the Orlett houses is made of compressed paper. The wiring is deplorable. It costs people living in the Orlett houses £1.40 for a plug for any electrical appliance, and the plugs are difficult to come by. As a result of this difficulty, the tenants are overloading their wiring system.
For those reasons, the tenants welcomed the SSHA. Because of the bad electrical wiring and the type of materials with which the houses were built, I fear for the lives of some of my tenants, and I urge the Minister to take action.

Mr. David Lambie: We are grateful to my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) for raising tonight the question of the Scottish Special Housing Association's modernisation schemes. It is not true, as the hon. Member for South Angus (Mr. Fraser) said, that my right hon. Friend


was dealing only with a specific instance in his own constituency. Every hon. Member who has SSHA houses in his or her constituency, throughout Scotland, knows that it is a general complaint.
I have just given the chairman of the SSHA, Bill Taylor, a petition from one of my own schemes within the town of Dairy, the West Kilbride scheme. The tenants complain that while the Cunninghame district council has been modernising and spending a great deal of money given to it by the previous Labour Government, to bring its council houses in the Dairy area up to date, the SSHA tenant who looks across the road and sees millions of pounds being spent on modernising council houses has not one ha'-penny being spent on his own SSHA house.
That problem applies not only in Dairy but in Kilbirnie and Beith and in my other two major centres where there are thousands of SSHA houses, the towns of Kilwinning and Irvine. Not only is no money being spent by the SSHA on its houses, but it has the cheek and audacity to keep increasing the rents. It has already increased them twice this year. The SSHA is increasing rents by substantial amounts, and spending not a ha'penny on repairs, while my own district council has put a standstill on rents and is spending millions of pounds on repairing council houses. That anomaly is creating a feeling of deep revolt among SSHA tenants, not only in my area but in every constituency in Scotland.
The matter is even worse, because the SSHA has only enough money to continue with the projects in the East End of Glasgow. I have nothing against the money being spent there, but my constituents complain that while they are having their rents increased, with no money being spent in their area, all the money available to the SSHA will be spent in the East End of Glasgow.
What will be the solution? If the Scottish Special Housing Association is no longer to be a building association but only an association that factors houses there is no need for the Scottish Special Housing Association. I call on the Minister to disband the quango and to hand houses over to the local district council. The people will then have their houses controlled by local councillors. who are elected to voice the opinions of the local

people. They will deal with rents and the amounts of money to be spent on modernisation. They will give a fair deal to the tenant.
I accept that my next remarks will not please some of my hon. Friends. Let us carry out Tory policy and get rid of the quango. Let us abolish the Scottish Special. Housing Association, and hand houses over to district councils. They will do a better job than the Scottish Special Housing Association has done.

Mr. Martin J. O'Neill: I should like to mention the effects of the cuts on the village of Tullibody in my constituency. A considerable number of houses are ready for renovation. Houses have been assigned for the purposes of decanting. The people know that their houses will not be renovated and that there will be no decanting. One house, at 41 Redlands Road, has been offered to every applicant for a four-roomed house in the county of Clackmannan. The Scottish Special Housing Association has not got the money to improve the quality of the house, to renovate it, or to bring it up to a tolerable standard.
It is clear that the Government wish to finish the job that they started on in the Tenants' Rights Etc. (Scotland) Bill. It is significant that the hon. Member for South Angus (Mr. Fraser) was silent for most of the time during discussion of the Bill, and he did not support any moves to protect sheltered housing. He did not try to protect houses in inner urban areas. The Tories wish to create conditions in which the people will have to pay higher rents for houses that will not be renovated. The obvious conclusion is that if they want better houses and houses at rents that they can afford they would be better to buy them.
There is a general strategy to shift responsibility for public sector housing on to private ownership. That is a squalid move, at the expense of many tenants who do not have the money to carry out the necessary improvements. They are often incapable of purchasing their houses, because all too often they are in danger of the dole queue. They have to live on supplementary benefit, and so on.


This is another example of the Government's insensitivity to the needs of council house and public sector tenants.

Mr. George Robertson: On 22 February—

Mr. William Hamilton: On a point of order, Mr. Deputy Speaker. Two Front Bench speakers have spoken in an Adjournment debate. It is outrageous that any of my hon. Friends should speak from our Front Bench during an Adjournment debate.

Mr. Deputy Speaker (Mr. Richard Crawshaw): In an Adjournment debate the Minister is normally given 15 minutes in which to answer. The hon. Member for Hamilton (Mr. Robertson) will speak for only two minutes. I could not be sure that any other hon. Member would speak for only two minutes. I shall call the hon. Member for Hamilton.

Mr. Alexander Pollock: On a point of order, Mr. Deputy Speaker. Is it in order to carry on a debate that is of importance to the whole of Scotland—as has been emphasised by the right hon. Member for Lanarkshire, North (Mr. Smith) and other hon. Members—in the absence of any representative from the Scottish National Party or from the Liberal Party?

Mr. Deputy Speaker: That is not a point of order.

Mr. George Robertson: On 22 February 1980 the Scottish Special Housing Association issued a press release. It states:
Some promises which have been made to tenants and to local authorities may not be honoured.
The chickens are coming home to roost. My hon. Friends have illustrated that the Scottish Special Housing Association's plea in that press release has become a bitter reality to many of its tenants. I congratulate my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) on bringing this issue before the House.
As well as speaking from the Front Bench in this debate I have a considerable constituency interest in the Laighstonehall area of Hamilton, where one of the most significant developments in

the SSHA's modernisation programme has been making progress apace. Much of the momentum of that modernisation has now come to a halt. As my hon. Friends pointed out, this is being accompanied by increasing rents for the houses in which people are expected to live. I hope that tonight the Minister will give some comfort to those living in SSHA houses, who are now suffering from the Government's public expenditure cuts.

The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): This has been an unusual and wide-ranging Adjournment debate. It has been interesting and unique in that it appears that the Labour Party's policy on the Scottish Special Housing Association is either to expand it or to abolish it. We are not sure which, because both points of view have been put forward this evening. It is quite clear that the Government's policy is somewhere in between. It is our policy to preserve the SSHA at a level that is consistent with the overall level of expenditure on housing and with the economic potential of the country at present.
I am delighted that the right hon. Member for Lanarkshire, North (Mr. Smith) has raised this matter, and I am happy to respond to the general points and to some of the detailed points covering his constituency.
I assure the House that it is the Government's intention that the SSHA, which has done sterling work in housing in Scotland for more than 30 years, should continue that work. We do not intend to wind it up, because we believe that it has an important role to play.
The right hon. Member for Lanarkshire, North correctly indicated that there has been a reduction in the current year of 20 per cent. in the finances available to the SSHA compared with its provisional allocation. My hon. Friend the Member for South Angus (Mr. Fraser) was correct to point out that when we are looking at housing expenditure it is wrong and misleading to suggest that on the day after the present Government took office expenditure on housing began to fall. He was quite correct to point out that expenditure on housing began to fall in 1974 and has continued to fall


ever since. That is a fact of life, which cannot be contradicted.
In that context the proportionate cuts that the SSHA has experienced this year are comparable to the reductions in housing allocations to local authorities, and it is considered only appropriate and fair that that should be the case.
The right hon. Member for Lanarkshire, North asked whether allocations for future years had been determined. He referred to an article in The Scotsman this morning. No firm decisions have yet been reached on the allocations for any year after the current year. As the SSHA itself has indicated in the article to which the right hon. Gentleman referred. it has been advised for its planning purposes that it would be sensible to contemplate a possible reduction proportionate to the overall reduction in housing expenditure announced in the White Paper—[Interruption.] The right hon. Member for Glasgow, Craig-ton (Mr. Millan) insists on mumbling in every debate that we have, but he should appreciate that it is unfair to his right hon. and hon. Friends who raised this matter and who presumably want to hear the answers. If the right hon. Member wishes to intervene, perhaps he will have the courtesy to rise.

Mr. Bruce Millan: The Under-Secretary knows that the public expenditure White Paper, which has already been published, shows these 40 per cent. reductions over the next few years, and it is completely dishonest and hypocritical to pretend that this is an open question. It is not open at all, the Government have decided.

Mr. Rifkind: I had assumed that the right hon. Gentleman had read the White Paper. He will therefore be aware that it shows the global sums available for housing expenditure. [Interruption.] Will the right hon. Gentleman please stop mumbling. I gave way to him, and he could at least have the decency to remain quiet while I answer his question. [Interruption.]

Mr. Deputy Speaker (Mr. Richard Crawshaw): Order. I know that there is strong feeling, but the right hon. Member for Glasgow, Craigton (Mr. Millan) is forgetting himself.

Mr. Rifkind: The White Paper on housing expenditure gives the global sums that will be available for housing spending over the next few years. It does not attempt to break down the amounts that will be available to local authorities, the housing corporation or the Scottish Special Housing Association. As my hon. Friend the Member for South Angus pointed out, in the current year the housing corporations have experienced no reduction in real terms in their allocation. It does not automatically follow that the proportionate cuts for any individual recipient of central Government funds will be exactly in relation to its present expenditure. That fact is well known to the housing authorities, even if it is incapable of being absorbed by Opposition Members.
The article in The Scotsman was gravely misleading in a number of ways. I shall briefly mention two. As has been repeated by a number of hon. Gentlemen, it suggests that the reductions that the Government have indicated will force the SSHA to abandon almost all its projects outside Glasgow. I shall indicate some of the projects outside Glasgow which, in the light of the figures given, the SSHA intends to carry out over the next few years. In the current year there are new build projects in Keith, Galashiels, Edinburgh, Bonnyrigg and Grangemouth. There are modernisation projects in Edinburgh, Hamilton, Greenock, Bellshill, Blackburn and Douglas. In 1981–82 there are new build projects planned for Inverness, Tweedbank, Edinburgh, Stirlingshire and the Western Isles, and modernisation projects for Edinburgh, Dundee, Oakley and Hamilton. In 1982–83 there are new build projects for Gordon, Arbroath, East Lothian, Inverclyde, Motherwell and Kilmarnock, and modernisation projects for Greenock, Dundee, Dalkeith, Clydebank, Tullibody, Newarthill, which the right hon. Gentleman will be interested in, and New Stevenson.

Mr. David Steel: Did I hear the Under-Secretary aright? Did he include Tweed-bank in the 1981–82 projects? If so, why has that been denied in all other Scottish Office pronouncements?

Mr. Rifkind: I do not know about Scottish Office pronouncements, but these are detailed projects which the SSHA


is responsible for determining. The Scottish Office does not decide these matters. I shall deal in a moment with the priorities that the Scottish Office indicates. Beyond that it is for the SSHA to indicate its own projects.

Mr. Lambie: What about Cunninghame?

Mr. Rifkind: The list that I have indicated is not exhaustive, but it demonstrates the nonsense of the report in The Scotsman that there will be no projects outside Glasgow as a result of the Government's policies.
There is a further false suggestion in the article, that the Government have indicated to the SSHA that its priorities should be the GEAR project, economic expansion houses, the modernisation of steel houses and the rest of Glasgow. That also is incorrect. The Government have followed the precedent of the previous Government and indicated two priorities, and two alone, to the SSHA. One is economic expansion houses and the other is the Glasgow eastemare renewal scheme. Apart from that, the Government have indicated no priorities that the SSHA is required to follow. It has been for the association to decide its priorities. The association has indicated that the priorities for the remainder of its resources should be pre-war SNHC steel houses. It considers that those are the houses most in need of modernisation.
I turn now to the specific point that the right hon. Member for Lanarkshire, North raised—the 52 Atholl steel houses at Newarthill. Having nearly completed the comprehensive modernisation of its Weir quality steel houses the SSHA, as I have indicated, is giving priority to prewar, SNHC houses. Those are generally in a worse condition than the Atholl houses, a start on which has, in most cases, had to be postponed for about two years, because of the reduced finance available. Only two Athol] steel projects are going ahead as previously planned and those are schemes that are in a worse condition than the other housing of that category. The remaining Atholl steel projects, including the 52 steel houses at Newarthill, which were previously programmed to start in 1980–81, have not been put back by three or four years, as the right hon. Member for Lanarkshire, North indicated

in a letter to me earlier this year, but are re-scheduled for 1982–83.

Mr. John Smith: The hon. Gentleman will understand that that is news to me and to the tenants. They had been told that work could not start before 1981 and that no date could be given beyond that. Is the hon. Gentleman conveying new information? If so, I am grateful to him.

Mr. Rifkind: I am conveying information that I have received from the SSHA. These are not matters determined by the Government. We have indicated the two specific priorities to which I referred and, apart from those, it is up to the SSHA to decide its programme in the light of the remaining resources that will be available. In the light of that general indication, the SSHA's present assessment—and it is no more than an assessment—is that it hopes to be able to start those projects in 1982–83. I emphasise that the SSHA is not giving a firm guarantee.

Mr. Smith: That information is important to the tenants concerned. Should it not have been made available to them, rather than its having to be extracted via a Minister in the House?

Mr. Rifkind: I have no doubt that the SSHA intended to make the information known as soon as possible. When the right hon. Gentleman proposed to initiate an Adjournment debate in which he would obviously refer to circumstances in his constituency, it was inevitable that the Government would contact the SSHA to find out its intentions and it would have been foolish of me to refuse to give the information. The right hon. Gentleman would have been the first to complain if the information could have been given, but was not divulged.

Mr. O'Neill: Does not the hon. Gentleman concede that, if the prognostications by the Government that public expenditure cuts are to be even worse than those indicated in the White Paper are correct, the figures and dates that we have been given in the debate are meaningless and the time scale has no significance?

Mr. Rifkind: When any Government, including a Labour Government, introduce reductions in spending, commitments or aspirations that may have been indicated previously sometimes have to be frustrated. I can give no guarantee


that further reductions in public expenditure will not be required. That is not a matter for me to decide.
All that I am indicating is the intentions that the SSHA hopes to be able to implement, taking into account the information that it has received from the Government about the likely resources that will be available. The House will recognise that it is helpful that such information should be made available. That is why I gave it.
Labour Members have been more willing to take part in this debate on expenditure cuts than they were in the debate earlier this week when we had more time to discuss such matters and to go into detail. However, we welcome the fact that their interest in public expenditure in Scotland has been re-awakened.
We recognise that the SSHA is going through a period of reduced activity and

we acknowledge that it will bring genuine and deep disappointment to many tenants who had hoped or expected that housing modernisation would take place. We are not trying to hide behind a suggestion that that will not happen.
We care most about the economic recovery of this country. We believe, as did the Labour Government when the IMF took over their books, that a reduction in public expenditure is an essential ingredient in economic recovery. Therefore, it is necessary that the SSHA, as one major recipient of public funds, should be included in that exercise. However, it still has an important future, and recognises that fact. I have no doubt that it will continue to make an important and significant contribution to the housing needs of Scotland.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.